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Insights 01/2014 Contents

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Industry 4.0 | New Business Models Exploring new terrain

Industry 4.0 is more than smart factories.
Products stay connected with manufacturers
after being shipped out, constantly
providing them with valuable data. This
enables businesses to develop
additional Internet-based services 
and
engage in activities far beyond the
traditional boundaries of their industries.

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Industry 4.0 is more than smart factories. Products stay connected with manufacturers after being shipped out, constantly providing them with valuable data. This enables businesses to develop additional Internet-based services 
and engage in activities far beyond the traditional boundaries of their industries.

The name Conti stands for the traditional strength of Germany’s auto industry. Through innovation, collaboration and fusions, the company has transformed itself from a tire manufacturer to a global supplier of system solutions for vehicle electronics. Nowadays, braking and safety systems, solutions for powertrains, and offerings for connectivity and infotainment are just as important as rubber. So it follows that CEO Elmar Degenhart announced at the IAA 2013 that the company will be networking cars more extensively with the Internet and investing in new services. Car owners are rethinking their mobility needs and expect vehicles to have the same comfort and functionality as other smart devices. According to Degenhart, in the future, “vehicles will not only be

connected with the Internet, but part of it. Networked, smart mobility opens up an enormous potential for innovation and implementing new functionality.” And new business models for the suppliers, too. Networking will make them data collectors that use big data and analytics to interpret this data. With this information, suppliers can refine their products through new services for automakers and end customers – from fleet management to optimizing maintenance and incorporating public transportation in travel planning.

New services through networking

In this light, Conti also represents the opportunities of “Industry 4.0.” The term is often reduced to automated factories in cyber-physical production systems (CPPS), since it was first coined in 2013 at the Hannover Messe and CeBIT trade shows. But Industry 4.0 is more than just the smart factory. “A growing number of products are coming off the production line and

remain connected to their manufacturers through chips or sensors. They can evaluate comprehensive, up-to-date information from all over the world that customers would never receive themselves,” states Frank Riemensperger, Country Managing Director of Accenture Germany. “We can already see that individual technologies like embedded chips, mobility or big data can be strung together and combined, particularly in our leading sectors, with smart networked products and context-based analysis of all available information to exploit new business models that will greatly change the industry.” That is also the reason why Germany’s National Academy of Science and Engineering launched the Internet-based Business Services project.

The growing importance of services

A few companies are already offering products that are part of Industry 4.0, serving as good examples. The “Internet of Things, Data and Services” – where

machines and materials communicate and operate – is reality. There are currently around 10 billion links between machines or products. By 2020, over 50 billion objects will be networked: products that will save data, use distributed services via the Internet or send product-related information on their lifecycles.

They make it easier to recognize new customer wants and needs, accelerate processes, boost productivity, reduce costs and stimulate ideas for further business models. “The ‘Internet of Things and Services’ offers immense potential for innovation,” says Johannes Helbig, Chief Innovation Officer (CIO) at Deutsche

Post. “If we succeed in integrating web-based services into Industry 4.0, we will expand this potential in an ideal way.” A growing number of businesses recognize the importance of networking for transforming their business models or overcoming traditional industry boundaries. They operate in additional fields through the intelligent combination of skills and abilities – primarily by offering new services, in particular those that are driven by ongoing development in all IT branches. These include services that will fundamentally change individual mobility. Networked vehicles, modern telematics and digital access systems enable manufacturers such as BMW and Daimler to offer short-term use of vehicles in parallel to sales. DriveNow and Car2Go transform traditional manufacturers into service providers that use mobile data services to make custom offers, some of which are limited to a few hours.

Bosch is a pioneer in combining electric mobility and routing: in Singapore, the company ensures that

electric cars are routed to free charging stations in time to recharge. Its software evaluates data transmitted by vehicles and charging stations on location, destination and capacity, and calculates the best route in accordance with traffic. “The diverse opportunities of this integrated service platform are especially clear in mega-cities,” said Franz Fehrenbach, then Chairman of the Management Board at Bosch and now Chairman of the Supervisory Board, at the project launch. Once this data is available, these businesses can furthermore act as service providers or joint venture partners, for example, with insurance companies for “pay-as-you-drive” offers. In this scenario, the insurance premium is based on data available on the individual customer’s driving style. Speeders pay more, careful drivers less. “The German market is ripe for this type of telematics product,” says Jürgen Cramer, CEO of Sparkassen Direktversicherung.

Data analysis as a necessity

The health care sector is also ripe for offerings that turn device manufacturers into analysis and consulting partners. Hardware suppliers can provide customers with customized information on how to use their products or new medical knowledge. This knowledge is gained through the constant analysis of data generated by devices in use and transmitted to the manufacturer. Anyone who can centrally analyze thousands of X-ray images using a standardized method can find patterns for questions that can provide information for improving treatment. Ideally, it can help make a diagnosis before the outbreak of illness, enabling treatment to begin sooner.

The same applies to mechanical engineering: tool manufacturer Komet Group constantly monitors the use of its products with sensors and networking. This way it can determine precisely when a drill bit is close to breaking and should be replaced.

Swapping parts at the perfect time saves money, too: the product life span can be fully exploited, the number of production delays minimized, the risk of sudden failures reduced and inventory stockpiling cleverly decreased.

Constant availability of information from smart products is also important in product lifecycle management (PLM). Accenture offers services to help the industry develop products efficiently in an end-to-end process, from research to service, and launch them on the market quickly with easy maintenance. For example, a smart escalator from 
ThyssenKrupp reports its actual energy consumption status. This enables more energy-efficient operation for the manufacturer, who in turn becomes an energy optimizer for the customer. It can also serve as a basis for operating models that benefit both the producer and user. Providers like Trumpf constantly use the data from their machines, and not just for remote maintenance.

They gather data to optimize usage and develop new services. This is how the TruTops Fab app came about, which Trumpf customers can use to control their production. The software shows the status of the machine; plans and monitors orders from programming through production and delivery; and manages inventory, customer data, offers and orders – rendering the PPS system of an established software company redundant and turning the machine company into an IT service provider. Peter Leibinger, member of the Trumpf Managing Board, even sees an opportunity for his company to become a platform for optimizing machine capacity through data collected in real time. Trumpf could inform customers with usage peaks about machines in other companies not running at full capacity, which they could reserve: “If you combine all of the sheet-metal fabricators in Germany who have networked machines, you could balance out capacity bottlenecks.”

Becoming a global player


Businesses must also forge ahead in new areas for the green energy revolution and combine their expertise with the qualities of others. The Omnetric Group, a joint venture by Siemens and Accenture, is one such company. Siemens’ expertise with energy grids and Accenture’s IT know-how form the basis for developing custom solutions for energy companies to provide efficient, secure supply management for smart grids. Omnetric merges the supplier’s operating technologies, real-time grid management and smart metering for every device in the house, if necessary. This is yet another aspect of Industry 4.0, where everything is networked. It is naturally only truly valuable if people can take advantage of the opportunities. With electricity, demand-response solutions help somewhat with regulating consumption. New business models arise with virtual

power plants. Meter-data management shows energy customers their usage habits and simplifies energy-efficient behavior. “By integrating new and previously isolated applications, suppliers can improve grid stability and bridge the gap to real-time grid management,” says Jan Mrosik, CEO of the Smart Grid Division at Siemens, to explain the services that Omnetric provides to support energy companies.

For Frank Riemensperger, Germany has excellent opportunities to become a global player with Industry 4.0. “Our businesses have been able to manufacture increasingly complex, high-quality products in their leading markets,” states the Managing Director for Accenture Germany.“ Now the goal is to make these products smart and develop new service business models around them.”

Manufacturing | Competitiveness Champions organize networks

Leading manufacturing companies operate
in a global production network of their own
facilities and contract manufacturers,
successfully serving regional markets with
custom offerings. A new Accenture study
reveals the secrets of their success.

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Leading manufacturing companies operate in a global production network of their own facilities and contract manufacturers, successfully serving regional markets with custom offerings. A new Accenture study reveals the secrets of their success.

Gerhard Schröder didn’t mince words. 
“We cannot make a living from cutting each other’s hair,” said the former German chancellor back in 2002 at an event celebrating the 40th anniversary of the Opel plant in Bochum. Converting to a pure service economy would be a mistake, he argued, adding that people cannot completely abandon the “old economy.”


A decade later, we see how right this assessment was. National economies with a strong industrial base, like those of Germany, Austria and Switzerland, have been among the most successful in weathering the crisis since 2008. It follows that manufacturing companies are also ranked near the top as “Growth Champions” in Accenture studies on the Top500 companies in

Germany and Switzerland as well as the Top100 in Austria: automakers such as VW; plant and machinery suppliers such as Andritz; and high-tech specialists such as Sonova. These high-performing companies set themselves apart through their adoption of shrewd strategies, which include steady investments in innovation and expansion into emerging markets.

The goals are agility and efficiency


Accenture’s analysis of 250 manufacturing companies around the world shows that these are indeed the right priorities. 
The “Global Manufacturing Study” has determined the success factors for particularly prosperous high-growth companies that can serve as cross-industry benchmarks for all internationally active businesses. “The manufacturing industry recognizes that it cannot respond sufficiently to increasingly volatile markets, so many companies are focusing their investments on improving their ability

to operate with greater flexibility and standardization at the same time,” states Russ Rasmus, Global Managing Director of the Accenture Manufacturing Practice. This can range from rethinking the business model and changing talent management to restructuring organizational and IT infrastructures.

The study speaks in clear language: manufacturing companies that are more profitable and productive with greater agility and efficiency than their competition have driven the evolution in 10 different key areas. But above all, these manufacturing leaders are transitioning their production to internationalization. They can respond quickly and with precision to changes in demand within individual facilities, as well as across several locations within their manufacturing network. Modular and standardized processes enable them to adjust swiftly to fluctuating demand by shifting capacities in their own facilities and with contract manufacturers. This requires an excellent overview of the entire

network to establish a balance between capacity and demand – and exact plans for utilizing contract manufacturers more heavily and collaborations as part of a long-term strategy.

The importance of stronger internationalization is emphasized by the fact that almost every leading manufacturing company has either moved production facilities to new territories or opened additional locations in the last three years to quickly take better advantage of the opportunities in emerging markets. This is the result of successful manufacturing companies having an exact vision of the right balance between new investment and the usage of existing products or capacities. In this vision, product lifecycle management will take on a higher priority in the future.

 

Read more about the manufacturing study at http://www.accenture.de/globalmanufacturing.

The rise of talent management

Manufacturing leaders place modernizing their IT infrastructure to drive production automation and implementing a digital strategy right at the top of their agendas. IT enables them to recognize changes in markets or customer demand early on through market research and analytics. It allows them to take advantage of the opportunities that these changes create – and to do so faster than the competition. In addition, it increases the understanding of individual regional differences, to which they can respond with custom offerings. Targeted talent management is another success factor that leading manufacturers use to train their employees for future responsibilities essential to business success, as well as to find suitable qualified specialists.

Organization | CIO-CMO Collaboration No common goals

IT managers and marketing directors don’t always
think in the same direction, 
and often set different
priorities. This endangers competitiveness. A new
study 
from Accenture analyzes the reasons behind
the lack of cooperation and offers 
ways to achieve
better collaboration.

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IT managers and marketing directors don’t always think in the same direction, 
and often set different priorities. This endangers competitiveness. A new study 
from Accenture analyzes the reasons behind the lack of cooperation and offers 
ways to achieve better collaboration.

People who make assertive statements attract attention – especially if they have already said or done something interesting in the past. So it makes sense that American marketing guru Larry Weber, CEO of the globally active full-service communications agency Racepoint Group, caused a stir when he was recently quoted in the magazine CIO.com as saying that the IT department will soon become the technology team for Marketing. “There will still be typical IT jobs, so the Chief Information Officer won’t be out of work,” noted Weber. “But over the long term, the CIO won’t be nearly as important as the Chief Marketing Officer.”


IT’s growing role in marketing


Weber’s theory may sound bold, but it fits today’s trend. Many companies are facing the task of re-sorting their upper management level and redistributing responsibilities. In doing so, they are responding to profound changes that have been observed for some time within technologies and customer expectations. To gain insights into customer wants and needs or ideas for additional sales channels, businesses are focusing on topics like mobility, cloud computing and analytics. Some CIOs 
previously considered that to be primarily an infrastructure responsibility, and limited themselves to providing hardware and software for CMOs to run their campaigns. Strategic business considerations played a subordinate role.

This perception and distribution of responsibilities will change. According to an IDC study, department managers are directly involved in 60 percent of IT i

nvestments. “Marketing is turning into a data-driven department within the business,” states IDC analyst Rich Vancil. Peter Sondergaard, Head of Research at IT specialist Gartner, notes: “CMOs could have a larger IT budget than CIOs by 2017.” Practitioners agree. “We had the decade of major ERP investment until 2010,” according to Daniel Hartert, CIO of the Bayer Group. “Now we are in a phase where ERP is being surpassed by investments in customer relationship management, R&D support and business intelligence” – areas in which the CMO is responsible for strategic interfaces.

Both areas need to cooperate

This does not necessarily mean that the CIO should be subordinate to the CMO – quite the opposite: collaboration on equal footing between Marketing and IT based on trust and respect for each department’s 
individual expertise is the only way businesses with well-thought out investments in IT and

marketing can make a major step toward higher performance. A study by Accenture illuminates the most important aspects. “The CMO-CIO Disconnect: Bridging the Gap to Seize the Digital Opportunity” takes an honest, unvarnished look at many misunderstandings that make cooperation between CIOs and CMOs more difficult, but also reveals how businesses can achieve better collaboration between the two departments and ensure future business success (see text below).

However, this objective is still a long way off in the future, as a survey of CIOs and CMOs in leading companies shows. It starts with awareness of the problem. While three-quarters of IT decision-makers are convinced that the departments need to communicate more and cooperate better, only one out of two marketing managers says the same thing. Their priorities are different as well: the main driver for CMOs to work together with CIOs is to gain greater insight into customer wants and needs. This plays a subordinate role from IT’s perspective. On the other

hand, data protection and IT security is very important for CIOs, while these are of lesser importance to CMOs. In fact, CIOs and CMOs give different answers to many operational and strategic questions. “Although both sides say that the relationship has improved,” emphasizes Glen Hartman, Global Managing Director of Digital Consulting at Accenture Interactive, “only one out of 10 believes that collaboration at the highest management level is good.” His summary: “Many people talk about closing ranks between CIOs and CMOs, but few act on it.”

Collaboration pays off

Smooth collaboration can, however, be achieved. At ING-DiBa, Germany’s third-largest private bank, things are going well thanks to cooperation instead of confrontation. “We have a high degree of technological knowledge in large segments of Marketing, and our IT colleagues are very market- and customer-oriented in their thinking and actions,”

says Marketing Director Birgit Spors. “The fact is, no one is standing between us and IT: we realize projects together. Furthermore, market impulses also come directly from IT.” 



Motorola Solutions in the USA has dealt with the differences between CIO and CMO in an entirely different way. Here, Eduardo Conrado holds both jobs, as Senior Vice President of Marketing & IT.

How CIOs and CMOs will work
together in the future

Identify the CMO as the Chief Experience Officer (CXO): As CXO, the CMO will 
be responsible for understanding the drivers and enablers of a connected customer experience across channels, and he or she will play an important role in making the multichannel strategy an integral part of a company’s business strategy.


Accept IT as a strategic partner for Marketing: Marketing should no longer 
view IT as just a delivery platform. Both groups should collaborate to understand what systemic changes would allow them to take advantage of new technologies while reducing cost and complexity.


Agree on the business levers for integration: CMOs and CIOs should look beyond 
their silos to harness the power of technology and analytics to shape the most-relevant consumer experiences.

 

Topic-related links

Change the skill mix: Marketing should become more tech-savvy about digital architecture, and the IT organization should become more agile and responsive to 
the market demands of the digital age.



Build trust by trusting: CMOs and CIOs must open the floodgates of communication and trust each other. Successful marketing depends on it.

 

Shared Services Organization | SBB The power of organization

Swiss federal railways has bundled its financial accounting,
a key part of its finance division, into a shared services
organization. Standardized processes, new organization
design and continuous performance monitoring ensure
reliability, transparency and customer orientation.
Accenture supported the company throughout the journey.

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Swiss federal railways has bundled its financial accounting, a key part of its finance division, into a shared services organization. Standardized processes, new organization design and continuous performance monitoring ensure reliability, transparency and customer orientation. Accenture supported the company throughout the journey.

The goal was clear. “We need to separate our finance division from its image as a pure back office with a supporting role and make it a valued business partner for other departments within the company, as well as for customers and suppliers,” announced Georg Radon in 2010, setting the course for a road map of restructuring at the Swiss federal railways (SBB) in Bern. According to the CFO, only an extensive transformation of the business model could position the finance organization as a process- and customer-oriented service provider that adds real value through great efficiency.


Improved quality and efficiency


Radon had a very precise vision for the initiative. A shared services organization (SSO) would take over several tasks being performed using different standards in the Passenger, Freight, Infrastructure and Real Estate divisions, as well as at group level. Specialized teams would take care of accounts payable, accounts receivable and assets financial accounting, general ledger accounting, and service management for all internal and external customers, in accordance with standardized processes. Centralized service management would then be enabled to measure efficiency and quality improvements based on clear and transparent performance data.

Three years later, it is clear that it works. The SSO started in March 2013 with 130 employees. Controlling was exempted from centralization, and

has access to the service organization through one accounting advisor per division. After a brief refinement phase, the financial accounting not only saw a 20 percent boost in productivity – other key indicators improved significantly, too. A clear definition of responsibilities and procedures ensures that most queries are answered within 48 hours. In addition, SSO Manager André Abegglen praises the methodical approach: “The new structures and tools allow for better human resources, capacity and project planning than before, which in turn helps us avoid massive workload peaks.”

In addition to the CFO’s clear road map and employees’ willingness to change, design and implementation support from Accenture was crucial for the successful introduction of the shared services organization. As a partner, Accenture knows the company and industry from earlier joint projects and has a great deal of expertise in finance organization,

processes and change management. “SBB wanted to strengthen its own organization rather than outsource any tasks to an external service provider,” stated Winfried Bechtel, Finance Shared Services expert at Accenture. “Our business process outsourcing specialists also help on these internal projects to develop the best custom solution with their comprehensive, cross-industry experience.” After a feasibility study by Accenture, the project team comprised of experts from SBB and Accenture refined the solution from a basic concept through implementation and go-live to a six-week stabilization phase. Required changes essential to bring the SSO to life and impacting processes, organization, human resources, communication and service management were implemented in a sequenced approach.

Interest in employee ideas

Along with answers to questions on technical and process optimization issues, involving employees to achieve acceptance was key to the initiative’s success.

“IT was not in the foreground as much as with other projects. In particular, we created a new ticketing system for centralized query processing and otherwise focused mainly on workflow adjustments,” noted Thomas Haslinger, Accenture Project Manager. “Comprehensive change management was more important, so that employees could find their bearings with the new SSO and deliver excellent performance.”

The CFO constantly made clear how important the project was during the planning and implementation phases. There were many meetings to explain the process to managers and affected parties and secure their support, which enabled them to contribute their expertise to the search for the best solution. Monthly status updates in the design phase provided project information. Anyone could ask questions and suggest ideas. Affected employees were assured that this was restructuring, not a targeted downsizing or outsourcing of the finance organization.

As such, employees were prepared when they learned that they would need to apply for newly created

positions for the transition to the shared services organization. They were informed about job profiles that they could choose from. They had three months to do so, with an internal SBB job center advising them, checking their qualifications and determining any training needs. “This removed employees’ fear about their careers and even highlighted opportunities for a new direction and expanding their professional horizons,” emphasizes Thomas Haslinger.

 

The SSO is considered a milestone for the implementation of a modern finance organization.

Service orientation training

After SSO Manager André Abegglen named his
future department managers, they themselves chose their team leaders and then collaborated to select team members. They then underwent a knowledge transfer process developed by two Accenture experts for change management and training that covered not only technical and content aspects of their new roles, but also service orientation.


The result speaks for itself, as SBB CFO Georg Radon insists: “The introduction of a finance SSO is a milestone in this company for creating a modern, high-performance finance organization.”

 

Profile
 SBB


Headquarters: Bern, Switzerland

Executive management: Andreas Meyer, CEO
Employees: 29,000 full-time employees (2012)

Operating revenue: 8.2 billion CHF (2012) 

Industry: infrastructure and transportation


Website: www.sbb.ch

Retail | Experience Shopping A personal touch is worth more

Stationary retail is not on the way out. When
products are presented well, 
customers
will come gladly. Online shops are reacting
to customers’ desire to touch and try out
products – by displaying them in special
stores in the real world.

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Stationary retail is not on the way out. When products are presented well, 
customers will come gladly. Online shops are reacting to customers’ desire to touch and try out products – by displaying them in special stores in the real world.

How did an Australian organic-food store end up in the Bild newspaper? Through an act of desperation that would completely change the face of retail if it ever gained acceptance. Every week, around 60 customers would consult with the owner about gluten-free foods, but then order them online. Subsequently, she started charging five dollars for the consultation, to be credited toward a purchase. The business model earned her this headline: “The world’s strangest store owner: She charges five dollars admission.”


Comparison is nothing new

The plan didn’t work – in four months, only four customers paid the fee. That was clear to Martina

Kühne. “Stores have always served as a showroom – customers should come in and look around,” says the senior researcher at the Gottlieb Duttweiler Institute in Zurich, Switzerland. “Today, we see the phenomenon of people visiting one store and purchasing products from competitors with their smartphones.” But often that isn’t a problem. This showrooming impacts storefront retailers less negatively than was once feared. Although many customers visit stores for information and then order online, others study product evaluations online and then purchase them at the shop around the corner. According to the E-Commerce-Center (ECC) in Cologne, one-third of all purchases in Germany, one-fourth in Austria and one-fifth in Switzerland are researched beforehand on the Internet.

Stationary retail scores primarily through a pleasant shopping experience and good accessibility. For some time now, chains have been moving back into downtown areas. Even furniture stores like IKEA want to be close to customers in central locations in an appealing retail environment. Not having every

version of every product on display is not a problem: Shoppers can use online terminals to customize and place their orders. The future of retail lies in multichanneling – intertwining stationary and online shopping, integrating inventory systems, linking online communications with the in-store experience. “Retailers need to invest in appropriate technologies rather than additional square footage,” states Professor Gerrit Heinemann, director of the eWeb Research Center at Niederrhein University of Applied Sciences.

Image and staging are important, in addition to technology. Helpful, well-trained employees polish a store’s image. The drugstore chain dm, whose products can be easily ordered online, is reporting record-breaking revenues and opening stores because people like to shop there. 
It won a Best Brands Award for Best Store Brand of the Year in 2012, to which founder Götz W. Werner commented: 
“The retail industry is looking more 
closely than ever at how it needs to change to suit customers.”


Online retailers open storefronts


It’s all about presentation. According to a study by EHI Retail Institute, the renovation cycle has shrunk from every nine years in 2003 to seven years currently. The goal with renovations is often to create a world of experience that online shops could never offer. Shopping is a leisure activity and a pastime. A growing number of stores are responding to this trend. The outdoor specialist Globetrotter not only offers useful items for spending time outdoors. 
At their Cologne location, an artificial lake, a cold chamber and an ant colony invite customers to test products under very realistic conditions.

Customers’ desire to test items out is even pushing digital businesses into the real world. Bonobos, which started out as a US-based online fashion store, is now opening what it calls “guideshops” – these are locations where you can check how clothes fit, feel

 

the fabrics and see colors in real life. You just can’t buy them. Customers place orders online, either in the store or from home. “This is a perfect example of how retail is changing,” says Kevin Sterneckert, Vice President of Research at Gartner. “It is changing from a place where people buy things to a place where they experience them.”

Online Retail | Mobile Commerce Ready to buy: anytime, anywhere

Online sales are booming. Customers can choose
between fully online shops, 
manufacturer
websites and digital subsidiaries of established
chains. The most successful providers
are those who adapt best to new technologies
and services.

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Online sales are booming. Customers can choose between fully online shops, 
manufacturer websites and digital subsidiaries of established chains. The most successful providers are those who adapt best to new technologies and services.

Alexander Margaritoff describes the changes in his industry bluntly. “This isn’t an online boom. It’s a tsunami that is sweeping over the retail world,” states the CEO of Hawesko Holding, a leading European e-commerce wine merchant. The numbers are clear. In 2012, German online and mail-order businesses posted 40 billion euros in revenue, around 15 percent over the previous year and a good nine percent of revenue in the retail trade. And the trend is likely to accelerate. “Social media as well as the growing number of mobile devices are bringing new momentum to electronic trade,” notes Professor Dieter Kempf, president of BITKOM (the German IT Association), at the launch of the new study “Trends in E-Commerce: Consumer Behavior in Online Shopping.”

Top-notch service is critical

A growing number of providers are getting in on the act – from Internet-only retailers to manufacturer-direct online shops and digital extensions of traditional brick-and-mortar chain stores. No one can simply count on market dynamics anymore to meet revenue goals. Innovative business models, sales concepts and marketing strategies are in demand. The use of new technologies or services is directly reflected in the success of a business.

Structures in the world of retail are changing dramatically.

Mobility is becoming increasingly important. Many customers want to inform themselves anytime, anywhere – and order items directly. Websites and

payment systems therefore need to be optimized for smartphones and tablets. By the same token, greater mobile availability also opens up new prospects for push marketing in location-based services (LBS): For example, a retailer’s app could report that a person from Hamburg is traveling to the Alps, and the CRM system could use data about previous purchasing behavior to determine that this person might be interested in a ski jacket. The app could present this offer along with an attractive sale price and guaranteed next-day delivery. This takes the already successful use of analytics in optimizing product portfolios or customizing offers for individual customer interests to a whole new level.

From the customer’s perspective, availability also plays a key role. Businesses that can offer fast, flexible delivery with inexpensive, uncomplicated return options have the advantage. For that reason, many online retailers are trying out new delivery modes aside from shipping to the buyer’s address. Amazon

offers the option of picking up packages at a Hermes shop. Karstadt is testing “Click & Collect,” where ordered products are waiting in the store to be collected. With Media Markt’s “Check & Reserve,” the customer can check online which locations have a product in stock. Online retailers without physical locations are experimenting with same-day delivery: The fashion platform Luxodo makes use of Tiramizoo, a service provider that collaborates with the logistics company DPD to deliver products (for a fee) right after purchase or at a specified time. And the Swiss marketplace PolyPort brings together people who need products delivered with potential transporters. Its pilot project was a potato taxi that used commuters to transport mountain-grown organic potatoes to buyers in Zurich.

Internet retail is totally mobile

The idea presented by the online fashion retailer Zalando at the Geneva International Motor Show may also be more than just a gimmick. When drivers see a piece of clothing while traveling that they like, they take a picture of it. An app sends the information to Zalando. Using GPS data, the item is shipped to the car’s current location and placed in an integrated package station in the trunk. The customer does not need to be present to receive the delivery or look for a package pickup location. This would make online retail fully mobile.

Sustainability Program | KELAG With the forces of nature

KELAG, the Kärntner Elektrizitäts-Aktiengesellschaft (based in
Carinthia, Austria), considers sustainability vital for its success.
Thanks to Accenture’s support, the 
company can now determine
the value added by ecologically or socially relevant projects –
and can use hard data to inform the public about their activities.

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KELAG, the Kärntner Elektrizitäts-Aktiengesellschaft (based in Carinthia, Austria), considers sustainability vital for its success. Thanks to Accenture’s support, the 
company can now determine the value added by ecologically or socially relevant projects – and can use hard data to inform the public about their activities.

Few energy providers are so consistently committed to climate protection as KELAG. “KELAG pursues a strategy of increasing its own energy generation from renewable resources by means of massive investments,” emphasizes Armin Wiersma, Board Member in charge of Finance and Business Development at the company. “We can already supply households, businesses and agriculture fully with electricity from local hydropower.” The company’s pumped-storage power plants contribute significantly to the energy transition as “green batteries”: they pump water into lakes at higher elevations using power generated from wind and solar parks. During peak demand, water runs back through turbines and produces electricity. In addition, investments in solar

parks and improvements to energy efficiency are being accelerated, alongside energy conservation consulting for customers.

But one thing is still missing: a sustainability strategy that summarizes this commitment and makes it definable, supported by concrete figures. The so-called Global Reporting Initiative (GRI) criteria will serve as such a benchmark for sustainability reporting and as a comprehensive concept of sustainability, used to show how the company is championing the environment and areas such as human resources or innovations for social issues – while at the same time securing its future as a business. 


Figures prove the commitment

KELAG hired experts from Accenture Sustainability Services, who have experience with creating custom business solutions. “Everything went very well,” says Alexander Holst, Managing Director of Accenture

Sustainability Services for Germany, Austria and Switzerland. “There was a sponsor on the Management Board, and interested employees from almost every area of the company came together in the project team.” Every few weeks the team worked with three Accenture specialists to analyze what KELAG was already doing in the area of sustainability, which other activities would make sense to pursue, and how they could be bundled in a company-specific definition of sustainability. The objective: to derive goals and methods from the definition and formulate them so everyone knew what needed to be done. “Key indicators will demonstrate whether goals were reached and what that means for the company’s success,” explains Accenture Project Manager Daniel Schmitz-Remberg, who calculates explicit business cases with his team on a number of topics.

KELAG will be one of the greenest energy service providers in Austria by 2021. In order to stay on course, the company worked with Accenture to develop a cockpit for controlling successes and

coordinating measures. It provides information about the development of 23 key indicators from four areas in which sustainability was identified as a key aspect of corporate strategy, including company and employees, products and innovations, environmental and climate protection, and region and society. This enables KELAG to calculate to what extent it prevents CO2 emissions through its concentration on emission-free energy sources for power production. Every year, 
1 million fewer tons are released than in the production of the same amount of energy using fossil fuels. The transition of district heating to recovered industrial waste heat also contributes to reducing CO2 emissions – the city of Judenburg alone saves about 3,000 tons a year.

CO2 emissions are prevented


Management is also reacting. The sustainability team is emphasizing the issue of green IT. Old PCs are being replaced with “thin clients” that save electricity and

space and reduce emissions and noise; plans for the new data center include cutting-edge technological and environmental aspects. Energy consumption will also be reduced once the headquarters is renovated to low-energy building standards. This will reduce operating costs by around 80 percent and turn the central office into evidence of a thorough sustainability strategy, as well as a showpiece for what KELAG energy consultants tell their customers: saving energy pays off.

Significant increase in credibility


Sustainability, though, is more than climate protection. The project team recognized the area of human resources as important, and determined the value added by more knowledge management and broad qualification programs. The shortage of trained professionals makes providing services more difficult when retiring experts cannot be adequately replaced. KELAG is countering this risk with sophisticated

training measures, a basis for economic success. Another subject: sustainable procurement. “Anyone who spends a great deal of money on procurement can motivate suppliers to avoid materials that damage the environment,” notes Accenture expert Alexander Holst. “Especially if they purchase primarily locally and show solidarity with the region.”

In 2012, KELAG purchased a volume of 60 million euros from almost 1,000 Carinthian suppliers, generating added value of 330 million euros in that year, including indirect effects.
 

The sustainability report sharpens our business strategy and boosts our credibility.

Documentation is another important aspect of the sustainability strategy. A sustainability report using internationally recognized GRI quality criteria provides comprehensive information about key indicators and projects. This supplements initiatives such as the Climate Protection Generation, with which KELAG addresses key aspects of the effects of ongoing climate change, while inviting its customers to take action as well: “We can change the future. Now.” Board Member Armin Wiersma is convinced: “The sustainability report boosts our credibility and sharpens our business strategy, too.”

 

Profile KELAG


Headquarters: Klagenfurt, Austria

Executive management: 
Univ. Prof. Dr. Hermann Egger, Dipl.-Ing., Management Board Spokesman, 
Manfred Freitag, Dipl.-Ing.
 Armin Wiersma, Dipl.-Kfm.

Full-time employees: 1,400 converted (2012)

Revenue: 2 billion euros (2012) 

Industry: energy

Website: www.kelag.at

Business Strategy | Mobility Always in touch

Companies that consistently align their business models with the use of mobile 
devices and services increase productivity as well as customer satisfaction, all while setting themselves apart from the competition. But to take advantage of the new 
opportunities, one must first debunk the many mobility myths.

Read article

Companies that consistently align their business models with the use of mobile 
devices and services increase productivity as well as customer satisfaction, all while setting themselves apart from the competition. But to take advantage of the new 
opportunities, one must first debunk the many mobility myths.

Lufthansa is utilizing electronic tickets, allowing customers to reserve and change flights as well as check in anytime, anywhere, until shortly before takeoff. At AkzoNobel, 57,000 employees use 10,000 mobile devices. Now the application landscape is being standardized and the company’s IT strategy realigned. 
Volkswagen has agreed with its works council not to forward business e-mails to mobile devices after working hours. This limits the constant availability of employees – and reduces the risk of burnout.

Many companies lack solutions


Mobility is not merely a phenomenon of the future – it’s a reality of today. Every business is engaged with the subject, even if it often goes by another name. The results of the Accenture Mobility CIO Survey 2013 bear this out: 73 percent of IT managers surveyed believe that mobility will have stronger effects on their business than the Internet. But which effects exactly? Few of them know. Half of them admit to having only a rudimentary strategy developed for the challenge. “With mobility, six misunderstandings are making it difficult for companies to concentrate on the main aspects – even preventing them entirely from concentrating on these aspects,” says Oliver Bittner, Director of IT Strategy at Accenture (see below, right: “Unmasking the myths”). 
And yet, uncertainty and skepticism fade away quickly when people take the time 
to correct these misunderstandings or myths – clearing the way for their own businesses to find the right answers to strategically important questions.


The dynamic pace of development


Mobility is important because the breakneck speed of technological development is bringing out – faster than ever before – new devices and application possibilities that can be used in the most-diverse situations. As such, mobility is changing the interaction between customers, employees and companies, and has a significant impact on business, politics and society as a whole. Consequently, the topic needs to be viewed from two perspectives. For many customers mobility is a solid part of their lifestyle, even if they themselves would not use this word for it. For them, one thing is certain: “My smartphone is always with me and makes my life easier.” For that reason, they expect personalized services that fit into their everyday lives. Nowadays many employees also take mobility for granted: they want to use technology in their professional environment that is just as progressive and modern as what they use in their personal lives. So the pressure for businesses to offer mobile services is increasing

from these two sides. The only way to live up to expectations from their customers as well as employees is to acknowledge this.

Having a long-term strategy for mobility is the best way to meet these expectations. Developing such a strategy requires a clear understanding of the topic as well as the recognition that mobility offers great opportunities and is forming the basis for future business models in many industries. A growing number of business applications are already portable to mobile devices. Customer data can be protected in mobile as well as stationary environments, online as well as offline. And sophisticated “mobile device management” (MDM) enables tablets and smartphones to be precisely controlled and managed, including any privately owned mobile devices that are also used professionally as part of a “bring your own device” (BYOD) 
arrangement. When used responsibly, mobility increases productivity while at the same time reducing employee stress, because employees can individually distribute their work throughout

the day or quickly access up-to-date information when visiting customers. When a company has a well-thought-out mobility strategy, reduced application complexity can even lower IT costs. And this applies in principle across all industries, in practically every company – and is even necessary in order to remain competitive.

The need to internalize mobility

For these reasons, all corporate leaders – not just IT managers – need to think in terms of mobile applications and make mobility part of every business decision. This does more than just boost productivity and satisfaction. Mobility can also be the driving force behind transforming the entire IT organization, because it opens up the opportunity for companies to establish and expand a previously unimaginable service-oriented IT architecture. However, Accenture IT strategist Bittner recommends openly discussing the framework conditions and risks: “A dialogue with

employees, customers, unions and the government is necessary to find answers to questions, including occupational safety and data protection.”

 

Unmasking the myths – the truth
about mobility


No playing games: “Mobile devices are supposedly little more than expensive toys for personal use and are not suitable for use in a work environment.” In fact, these days many business applications are already fully portable to mobile devices.


No data leaks: “Data protection risks potentially outweigh the opportunities arising from mobile devices and services.” Actually, in the future customers will prefer business partners who handle personal data responsibly.


No trigger for burnout: “Constant availability supposedly increases the workload and thus the risk of burnout.” Mobility does not automatically mean availability and – when used appropriately – it can even increase employee satisfaction.


No cost driver: “Mobility presumably increases IT costs and complexity significantly.” In actuality, the distribution of functionalities in individual apps really reduces the complexity of applications and enables IT architecture optimization.


No risk: “Employees using personal devices supposedly leads to a loss of control over business data and applications.” In fact, mobile services can be controlled and managed independently regardless of whether personal or business devices are used.

Versatile deployability: “Very few companies or industries supposedly benefit from the use of mobile devices and services.” In reality, mobility completely changes a company’s IT and makes work more customer- and employee-friendly.

Source: Accenture study (German only), at www.accenture.de/mobility-mythen

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