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Reimagine Work to Maximize Digital Value

As Cisco’s Chief Digital Officer, my entire focus is on enabling Cisco and our customers to accelerate the digitization of our businesses, countries, and cities.

Digitization provides an enormous opportunity to enable, differentiate, and define new business models; yet at its core, the success of the transition is predicated on the capacity to reimagine and reinvent the actual work. This includes building on the Internet foundation to extend the mobility of work, the distribution of work, the immediacy of work, and how and where work will take place.

Being digital isn’t just about technology. It requires companies to reexamine their entire way of doing business — and how they offer it — to deliver new value to customers and partners through fast innovation and operational efficiency.

Winners will be those who equate digitization not with basic automation, but instead with the notion of reinventing systems and tools to create a continuous cycle of innovation in a company’s product portfolio and operating model.

As we begin 2016, companies are under more pressure to accelerate digitization than ever before.

In fact, according to a 2015 study by the Global Center for Digital Business Transformation (DBT Center), “digital disruption” will displace nearly 4 of the top 10 incumbents by industry over the next five years. The average time to disruption is a mere three years!

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Digitization Offers Hope to Besieged Retailers

These are especially difficult times for the retail industry.

For starters, several of retail’s marquee names announced store closings or layoffs following a disappointing holiday sales season. Retailers simply haven’t benefited from cheaper gas and a relatively strong overall U.S. job market —retail sales declined 0.1 percent in December from the previous month, according to the U.S. Department of Commerce.

Making matters worse, brick-and-mortar retailers are quickly losing ground to online giants like Amazon. According to a recent article in The New York Times, Amazon captured almost a quarter of all U.S. retail sales growth last year.

The retail industry’s comparatively low IT spending has also placed it at high risk of disruption by technology-savvy incumbents and digital-native upstarts. In fact, according to the Global Center for Digital Business Transformation (DBT Center), retail ranked third among 12 industries studied in terms of potential for digital disruption over the next five years.

Clearly, all of this should send a strong message to the retail industry. Yet, at least from a “digital transformation” perspective, the industry doesn’t appear to be listening. Although 56 percent of retail executives say digital disruption is a board-level or CXO concern, fewer than one-quarter are doing anything about it by actively disrupting their own businesses.

It is not altogether surprising, then, that according to a new Cisco study, retailers captured just 15 percent of their potential Digital Value at Stake in 2015. By comparison, financial services realized almost twice as much digital value.

There are, however, some excellent examples of effective digitization in the retail industry.

Digital Transformation in Retail from Cisco Business Insights

A perfect case in point is F&F, the clothing brand of U.K. grocery retailer Tesco.

F&F needed to address multiple challenges: limited floor space, little visibility into what customers did in stores, and poor customer awareness of F&F online.

Using a combination of in-store Wi-Fi and integrated mobile and tablet access for shop associates, F&F management can now track customer journeys and gain insight into customer behavior. Free Wi-Fi gave F&F the ability to track customer journeys in greater detail. It also provided a means to deliver curated content and context-specific offers directly to customers’ mobile phones, incorporating connected advertising.

Over three months, the number of customers logging onto Wi-Fi increased 50 percent. Customers spent roughly 30 to 50 percent of their physical dwell time online on personal devices, while also engaging with push offers. This engagement changed customer behavior, increasing dwell times and sales.

F&F was also eager to build its online customer base to augment its relatively small physical floor space. Key technologies in the store made this possible. Interactive kiosks allowed customers to order items online and have them delivered to the store or their home. This reduced the number of customers leaving empty-handed because their size or preferred style wasn’t in stock at the store. It also offered a strong introduction to F&F online—and to styles customers might not otherwise have seen. The brand has experienced a steady increase in online sales as a result.

F&F has also piloted “remote expert,” a means of providing virtual access to a style advisor who isn’t physically present in the store. Although associates on the floor are armed with tablets to help advise customers, remote experts offer personal styling advice. Using the same kinds of technology tools as next-generation workers, remote experts employ video conferencing to increase customer engagement—supporting sales, especially on higher-ticket items—and to promote F&F as a fashion brand.

For many retailers, the biggest challenge in becoming a digital business is figuring out where to start. Here are three steps to take:

  1. Evaluate where you are on the journey—are you using digital capabilities to enable operational efficiency, differentiate through improved business processes, or define new business models? There’s a good chance that you already have key elements of the required digital foundation.
  2. Build an investment plan to meet your business objectives. Prioritize the biggest areas of payback and plan short-term gains that can fund ongoing investment.
  3. Finally, use this investment plan to close the gap between the
digital capabilities you need and the outcomes you want. While the fundamentals will remain the same, your objectives and priorities may change over time.

The time for retailers to act is now.

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Presenting a Roadmap for Digital Transformation at NRF 2016

Life in the Digital Vortex is challenging—especially for retailers. In an environment where averaged across industries four of the top 10 incumbents will be displaced by digital disruption in the next five years, retail ranks as the third most vulnerable out of 12. Retailers are also being squeezed between online-only retailers and traditional competitors that are further along with their digital transformations.

But with the threat also comes opportunity. Cisco’s most recent Digital Value at Stake research highlights specific digital use cases that industries can implement now to drive new sources of value.

According to the research, six industries—manufacturing, financial services, retail, service provider, healthcare, and oil and gas—will account for 71 percent of the total private sector Digital Value at Stake over the next decade. Yet, retailers captured only 15 percent of their potential digital value last year.

Retail Infographic_v2.4-01[2]

For more digital transformation stories in retail, click here.

It is clear that retailers need to begin their digital transformation journeys, and do so immediately. If you’re like many retailers, however, you may not know where to begin. What’s needed is a clear path to creating business value from digitization.

If you are thinking about digital transformation, just getting started, or well on your way, I invite you to join me at my Big Idea presentation at NRF on Monday, Jan. 18. Specifically, I will be detailing a roadmap to digital value for retailers, including how to:

  • Assess your current digital assets and capabilities
  • Understand and select specific digital use cases based on our economic analysis
  • Close the gap in digital capabilities to achieve your business goals

By attending my session and learning about a digital transformation roadmap for your business, you will avoid being part of the 40 percent of retailers that could be displaced by digital disruption. Instead, you will be on your way to capturing your share of digital value that’s there for the taking.

See you at the Big Show!

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Financial Services and Retail: ‘A (Digital) Tale of Two Industries’

Over the past six months or so, many of my blogs have dealt with the hot topic of “digital disruption” — both as a threat and an opportunity for companies, regardless of industry.

Several industries already find themselves inside this swirling “Digital Vortex,” which possesses the potential to reshape industries faster than perhaps any force in history. The power of the Digital Vortex is undeniable: it will displace nearly 4 of the top 10 incumbents by industry over the next five years, according to a 2015 study by the Global Center for Digital Business Transformation (DBT Center).

MikeRiegelVASVortexPic1

Click to Enlarge

As part of its study, the DBT Center ranked 12 industries based on their potential for digital disruption. The No. 3- and No. 4-ranked industries — retail and financial services, respectively — provide a fascinating contrast in how industries are faring as they confront the Digital Vortex. Read More »

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Analytics: Building a Winning Strategy in Manufacturing

Machinery, supply chains, and raw materials have always been core concerns in manufacturing. Today, another asset is just as critical — data.

General Electric Chairman and CEO Jeffrey Immelt said it well: “The industrial world is changing dramatically, and those companies that make the best use of data will be the most successful.”

I certainly agree. If manufacturers want to gain the agility, innovation, and hyper-awareness needed to compete and win, they must start thinking like technology companies. That means leveraging data — and the real-time insights derived through analytics — in impactful new ways.

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