Detecon DMR blue Leading digital!

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Detecon Management Report blue • 1 / 2013

www.detecon-dmr.com

DMRDetecon Management Report

Edition 1 / 2013blue

Leading digital!

leading digital!

www.detecon.com

We Lead Our Clients into the Digital Future.

www.leading-digital.com

We make ICT strategies work

Digital Transformation :Using Architecture as a Strategy for Goal-

Oriented Management and Implementation

Digital Business Models : New Role as Manager of the Customer Experience

Digitalized Customer Contact : Customer Self Services Require In-Depth

Understanding of Customers

1 Detecon Management Report blue • 1 / 2013

Dear Readers,

Welcome to this issue of our client magazine and its revitalized appearance: DMR BLUE presents important discussions on the latest topics engaging the attention of our consulting work and interesting findings from the sharing of ideas and thoughts with clients and experts.

During our project work every single day, we discuss and answer questions such as how companies from the most disparate industries imaginable can take advantage of digital transformation to gain the upper hand over the competition. We regard digitalization as the driver in tomorrow’s competition. The influence of informa-tion and communications technology on business models and our lives, whether on the job or in our personal activities, is growing inexorably and fundamentally changing companies and markets. When the competitor is only a click away, speed and specific competencies are in high demand. Digital technologies are advancing to become a key factor and are inseparably linked with corporate strategy.

The discussions about data protection which have flared up again will not put an end to this development. They will, however, cause the subject of security to take a permanent position right at the forefront of events – and ultimately we will all profit from this.

We hope you enjoy informative as well as entertaining reading!

Best regardsFrancis DeprezCEO, Detecon International GmbH

leading digital!


Content

Editor:Detecon International GmbHSternengasse 14-1650676 KölnGermany

[email protected]

Masthead:

Leading Digital 4

Digital Transformation

Using Architecture as a Strategy for Goal- Oriented Management and Implementation 12

Digital Business Models in the Service Sector

New Role as Manager of the Customer Experience 16

Future Store Concept

ICT as an Integral Component of the Branch Store of the Future 22

From a Telecommunications Service Provider to an IT Service Provider

New Business Fields for Telecommunications Companies 24

Reinhard Clemens, CEO, T-Systems

“The Cloud is not a Self-Service Store“ 26

The New Proximity to the Customer

Zero Distance 28

IT Department in Focus

Simply Simple 30

Mobile Payment

On Its Way Out or Success Story? 32

Management Model for Industrial Companies

Digital Map Reflects the Networking of Customers, Products, and Company 34

Supervisory Board:Klaus Werner (Chairman)

Executive Board:Francis Deprez (CEO)Dr. Jens NebendahlLocal Court Cologne HRB 76144Registered Office: Cologne

Printing:Kristandt GmbH&Co.KGFrankfurt/Main

Photos:FotoliaiStockphoto


We thank the co-authors:Philipp BodenbennerPatrick EberweinBernd EttelbrückStephanie FelgentreffAndreas MaisackAndré Seltitz

Connected Car

Success Factors for the Networked Car 36

Good Connections

Smart Business Networks Offer New Opportunities to Utilities 38

Digitalization on the Advance

E-Government Modernizes Public Administration at the National, State, and Municipal Levels 42

Detecon Events

Detecon Announces ICT Award 44

Interview with Professor Bernd Benninghoff, UAS Mainz School of Design

„How Does a Space Communicate?” 48

Success in the Digital Age

What CEOs Think about the Potential in Information and Communications Technology 54

Social CRM

From Digital Communication to Social Customer Excellence 60

Digitalized Customer Contact

Customer Self Services Require In-Depth Understanding of Customers 64

Does Anyone Need a Dog Anymore?

Thoughts about Mobility – and What Cell Phones Mean for Us 68

Mobile computing is changing business environments and the relationship between people and companies at a fundamental level. Online and offline worlds are melting into a single, digitally supported world thanks to smartphones and tablets. As real life happens, mobile digital end devices provide the context. The mobile world means “always-on computing”: personalized, always with you, and online at the press of a button.

There are already more than 1.5 billion smartphone users around the world, and the rate of growth remains at a level higher than 30% a year. Since 2011, the number of smartphones and tablets sold has exceeded the sales of PCs and notebooks. Apple OS and Google Android today hold a market share for PC platforms of 65% and have surpassed Microsoft. An astonishing 30% of the people in the USA own a tablet today ... a mere three years after the launch of the iPad! Wearables are also gaining in importance. They include fitness devices such as Fitbit and Jawbone or Google Glasses.

Always-On

Every industry today is giving thought to the next generation of networked products and services, wants to serve networked consumers, and must maintain its position in the competitive field of networked companies. Every industry and every company today is challenged by the enormous speed of the world-wide development of digital technologies. Digital technologies are no longer simple enablers of business models – Web services, apps, cloud IT, and broadband networks are fast becoming the core of the busi-ness model and determining the level of performance. While the degree of digitalization in the corporate environment is on the rise, many companies still lack the specific competencies and concrete digital agenda required to be a winner against the competition. Being a winner against the competition means: “Leading Digital”.

leading digital!


Digitalization accelerates social interaction and business transactions among networked companies, networked products, and networked consumers. Worldwide data volume will triple over the next five years. Today, more than 500 million photos are uploaded onto the Net every day, more than one billion Facebook users generate 2.5 billion new contents daily, more than 10 billion messages are sent via WhatsApp on any given day. The numbers of people and devices being connected to the Internet continue to grow. We already see more data being generated today between machines and goods by so-called M2M applications than between people. The Internet of Things is taking shape. “Big data” is the challenge confronting companies as they seek to secure com-petitive advantages from the volume and in-depth details of production, distribution, and customer data. The content available on the Internet has increased by a factor of nine in the last five years. This content is at the moment primarily in the hands of the top Internet assets such as Facebook, Amazon, Google, and Microsoft, the hub of worldwide data traffic in the USA. The “winner takes all” mindset and the network effects of the Internet are responsible for the centralization.

Under pressure from the lack of data security and increasing frequency of security gaps, the centralization is at high risk. The development of local Internet assets will accelerate rapidly, both in Europe and, above all, in Asia – most likely with growing political and government funding. Every company is asking itself these days just how great the effects of industrial espionage are, how valuable know-how can be protected, and what consequences arise for cloud strategies. Avoiding the cloud is not a viable solution. Pressured by private and business users regarding encryption and securi-ty of data transmission and storage, the Internet’s free-floating nature will be reined in because data protection dependent on location is rapidly becoming increasingly important. In the middle term, however, the focus will be on the issue of information security because of the tightly woven worldwide economic and social fabric: end-to-end security and high-security encryption technologies which function globally, but can also lead to a race between monitoring and encryption mechanisms. As IT beco-mes more and more firmly entrenched as the core of products and of business success, works protection will become more and more a matter of cyber security for many companies, demanding systematic analysis and intelligent investments. IT security and risk management belong at the CEO level because they are strategic decisions.

Speed

Security



The aging of the population in developed countries goes hand in hand with the growth of cities and densely populated urban areas. In 2030, 82% of the population in developed countries will live in cities. Cities are being transformed into huge data factories. Urbanity, data production, and data utilization are mutually reinforcing. Access and bandwidth are quality of life and competition factors and will be available as full-area coverage in cities, as will access to relevant local and social real-time data. In Beijing, for example, products ordered at JD.com can be delivered within one hour, including real-time tracking on Google Maps, by crews on bicycles with whom customers can flexibly coordinate place and time during the delivery. People, machines, vehicles, infrastructure, and buildings are packed tightly together in cities, turning cities into open-air computers.

The young generation is by no means the only group in the process of digitalizing itself. In the industrialized countries, the age group over 45 is growing the fastest on Facebook, and in the USA it is the group of reti-red people. Digitalization offers enormous benefits in social interaction, the dissemination of knowledge and experience, and the organization of daily life for the older generation, a group which is steadily growing as a proportion of the general population. The simplicity of end devices such as tablets is a significant factor in making older people digital. Moreover, their participation in this transformation is becoming increasingly im-portant because knowledge and experience in business and society are needed more and more urgently and for longer and longer periods. By using digital technologies, older people can take part in modified forms of work more simply and more effectively. As society ages, modern information and communications technologies are essential if we hope to be able to afford social services and health care services at all in the future. Growth in e-health will triple over the next four years alone.

Megacities

Demographic transformation

leading digital!


Social interaction and economic transactions can be accelerated technologically. But this acceleration of social and economic processes by digital technologies is less and less compatible with democratic discussion and decision-making processes because they cannot be accelerated to the same degree. This becomes especially clear when there is a need for fast action, as evidenced during the euro crisis in 2012, and the political legitimation is provided after the fact. Essentially, large cities which are part of a federal system gain significantly in power from the utilization of information and communications technologies. This gain comes partly from the innovation effect as a data factory and partly from the immediate proximity to populace and companies in combination with the potential capability of cities to realize relevant political deci-sions in real time in the real-digital world: mobile services for citizens, digital inter-faces for companies, mobility management, and voting. The degree to which cities are digitalized is decisive for their success in the competition for jobs and investments.

The backbone of the digital world is the wide-area coverage of Web services, telecommunications services, and network infrastructures. In short: telecommunica-tions companies provide the platform for the digitalization of business and society! As such, they must do more than simply secure efficient IT and the relevant processes for the extensive provision of their own telco (Web) services and partner services. They must simultaneously position themselves as platforms for the companies which want to connect and link their digital products and services. One thing is clear: the product and service experience of companies is more and more heavily reliant on the quality of IT and broadband networks of the telecommunications providers. The realization of the companies’ digital strategies will depend on the infrastructures and platforms of these providers. Highly developed capabilities in IT and standardized program inter-faces for developers and network operations are the basic requirements for the integra-tion and connection of business IT, digital processes, and communications services of companies. Telecommunications providers must now evolve the core competence IT to a higher plane, enter into the appropriate partnerships, and install efficient broad-band grids using an intelligent combination of technologies.

Politics and democracy

Telco as platform


Digitalization of society leads to the immediate proximity to customers and to their own employees for all companies. T-Systems calls this zero distance. Simplicity, real-time performance, and fle-xibility in processes are called for and can be realized only by a systematic transformation in the direction of an e-company with a constant eye on security and data protection. Internal processes and procedures must be designed to be just as customer-centric, flexible, and high-performance as if they were in competition with outside forces. Corporate IT must be comparable with the best on the market because IT infrastructure and IT services are available to competitors at any time on an “as needed basis”. Using such services, companies can link up into global value creation networks, the so-called smart business networks. Li & Fang from Hong Kong are one example of such a network, orchestrating more than 15,000 companies which together provide about 40% of all garments found in shopping malls in the USA. This works only because supply and service chains are linked to one another and partners can simply hook up and connect via “software outlets”.

Over the course of the last decade, corporate IT has gone through little change in comparison with the giant leaps in development taken by consumer IT. While we can digitally master our lives on Saturday and Sunday, we experience a journey back in time to a world which is more analog in its nature from Monday to Friday. Both consumers and employees expect the same flexibility, networking, and simplicity from companies and their products that the Apple iPhone and Samsung Galaxy make available to all of us. They want to use services on their smartphones and on the Web, have real-time feedback, and contribute their ideas to product development – anytime, anywhere. This is why more and more of today’s venture capital is flowing into startups which are developing social and related applications and Web services for companies and decision-makers in mid-level management. Startups such as Zendesk, Tidemark, or Asana are examples of applications which precisely meet the demands of networked mobile customers, networked products, and networked companies. These new software providers translate the paradigms of consumer IT into corporate apps and infrastructures – one of the core tasks which all companies must tackle in the coming years.

E-Company

Digital hub


lead

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Comprehensive transparency created by zero distance among compa-nies, employees, and customers cannot be achieved without sustained, value-oriented business operations of successful companies. “Integral business” describes precisely this type of consistency between values, financial performance, and social responsibility, a quality which drives customer loyalty and ensures a high level of attractiveness as an employer in the battle for talent. Companies operating in a networked world must generate enthusiasm among people, whether customers or employees, and turn them into fans. So while it must be clear what a company produces and how it does this, there must also be clari-ty regarding the why and what valuable contribution the company makes to society. The utilization of digital technologies is essential for communication among products, customers, and companies and is the indispensable prerequisite for realizing positive social and ecological effects such as flexible working worlds, efficient pro-duction, and shared value creation. “Integral business” and digital transformation are inseparably intermeshed with each other.

Value creation networks are springing up among specialized compa-nies at an increasingly rapid pace. Whenever a major part of value creation takes place outside of a company, collaboration becomes absolutely essential: not in telepresence meetings, but with connected core applications such as ERP software. The networking of inventory or production data among companies leads to collaboration require-ments which are new for many enterprises. A recent survey on the status of the development of social collaboration revealed that just under 60% of the respondents have launched social collaboration initiatives, but that these programs have barely left the starting line. Many of these initiatives have not been planned strategically. At the same time, customers would like to be integrated into the cooperation. Digital communications build on co-determination and participation; product reviews on the company’s home page, networking and sharing with other customers in various communities, and the co-design of product features generate a tremendous amount of information which companies must capture and translate into concrete actions.

Integral business

Collaboration


leading digital!

Top managers who are themselves “digital” and use hashtags, understand APIs, and track the development of wearables are few and far between. There are not many CEOs who take personal responsibility for the digital ambitions of their compa-nies. Frequently there is a lack of systematic analysis of the logi-cal sequence of the digitalization and the full scope of its impact on the business model. This includes the revenue and cost side related to all of the elements of value creation and encompasses the statement of the digital strategy in terms of clear priorities and the daily monitoring of implementation at the top manage-ment level. Successful management teams merge management and technology into a single perspective and lead the digital transformation of their companies themselves. Companies need a new generation of chief digital officers who drive the realiza-tion of digital strategies. No one can be a winner in the digital competition without personally being digital!

Digital mindset


Digital transformation creates new business potential, determines the performance, and changes in the long run the foundations of competition – through new market conditions, new customer requirements, new digitalized products and services. Processes must be rethought and designed to be much more flexible and dynamic if they are to function properly in global value creation networks. Barriers to market entry are falling, customers decide at any time about the brand position and commercial success.

The role and nature of utilization of information and communications technologies have fundamentally changed. ICT management is no longer limited to being an enabler for business; it is an essential element to achieve differentiation in the competitive field and a key part of business operations. IT is becoming a component of the product, and software serves more and more frequently as the basis of many business models. Companies like Apple, Amazon, and Google are “industrializing” technology and setting the standards for companies in many different industries. The industrialization of technology is fueling competition and redefining the pre-conditions for the performance of companies and organizations.

Digital leadership and IT management have already become decisive factors for coming out a winner in tomorrow’s competition. Leading digital means having the right top-down mindset, pursuing a holistic approach, and implementation in all of the operational units and at all of the value creation stages. Clearly structured enterprise architecture lays the groundwork for business transformation.

Leading digital does not mean starting up a “digital” project here and there. Leading digital requires companies to be in possession of a strong and sustained transformation capability, driven forward and realized uniformly with clear vision and objectives of the company and its organization, but most especially on the basis of concrete digital strategies.

Every industry, every company faces challenges from digitalization. Top management has the responsibility of prioritizing the right IT innovations and building up the right capabilities to ensure that the company remains relevant in the digital world. Only then will companies be in a position to set themselves apart and to differentiate themselves from the competition, to reach and to neutralize the standard of the competition at a high speed, or to secure a cost advantage from the high level of efficiency and the use of IT. Networked companies, networked cu-stomers, and networked products are the basis of the digital agenda which every CEO must now urgently develop.

New rules of competition

Digital agenda

Stefan Wilhelm is a member of the Executive Board. He is leading the Operating Office as well as the Know-ledge Management.

Using Architecture as a Strategy for Goal-Oriented Management and Implementation

The Internet has become firmly established as a social, technological, and business platform spanning the globe. Unimaginable volumes of information are shared, offers for goods and services are explored and ordered, and personal as well as professional networks are spun on the Internet of People. More and more people are using the mini-applica-tions tailored to their needs, the so-called apps, so that ob-taining required information is even simpler than before, enabling them to accelerate their own personal procedures. According to a recent study by Canalys, the four leading app stores in the world — Google Play, Apple’s App Store, BlackBerry World, and Microsoft’s Windows Phone — recorded a total of 13.4 billion downloads in the first quarter of the current year.

Digital Transformation


hy shouldn’t companies also make more determined use of these successful technologies for their core business? What will happen when products become Internet-capable, able to share information and even learn on their own on the Internet of Things? When services, with or without a connection to these products, can be integrated simply into a company’s existing processes and the combination of these products and services opens the door to new business opportunities? The Internet of Services. Will it then be possible to integrate the latest informa-tion about intended utilization and physical condition of the products into their life cycles, will companies be able to respond almost immediately to changed conditions and, for example, carry out less expensive preventive maintenance at the site and prevent costly, perhaps even dangerous repair work?

Potential still untouched in many cases

In a recent study conducted by Gartner Executive Program (Q4 2012), more than half of the 2,000 CIOs surveyed about their top priorities responded that although they had digital techno-logies on their own agendas, they had not noticed any major changes in their own roles within the companies. Budgets were more likely to continue to shrink. Moreover, statements by the survey respondents revealed that companies are utilizing no more than 43% of the potential made available to business by technology.

What could be the reasons for this? If decision-makers are to adapt successfully their companies to the changes in the business world, they need to have transparency concerning the effects of changes. Nor can they wait for the completion of long analysis projects; they must have this knowledge, ad hoc if possible, right from the initial statements about the business case. The authors Weill, Ross, and Robertson published the results of their study of more than 100 companies in their book “Enterprise Archi-tecture as Strategy”. One important result was that the greatest business success was realized when the balance between standar-dization and flexibility dictated by business was optimally achie-ved on the basis of the business operational model. The degree of standardization here can easily reach a mark of 70%. Another important challenge, one arising from the digital world, is to sift through the masses of structured and unstructured data in a short time so that new information relevant for value creation is generated and realized as competitive advantages. A transfor-mation of processes and their technical support are necessary here as well.

Here is an example: At the Hanover Industry Trade Fair 2013, the company Claas presented a solution developed jointly with Deutsche Telekom which enables farmers to control their pro-cesses more exactly on the basis of information from the harvest system. The use of GPS makes it possible to drive through and harvest the harvest areas more precisely; on large areas such as

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those in the USA, this means an additional yield of several tons. But completely new business benefits are also created. When the harvest volume is combined with the exact field position of the reaper, it is possible to determine whether certain areas are producing below-average yields and whether the more inten-sive use of fertilizer would be more effective. By developing this system, Claas created a competitive advantage for certain agri-cultural operations, but at the same time it transformed its own enterprise and invested in the fields of software and electronics; today, more than 500 experts are employed in this division.

Industry 4.0 demands strict enterprise architecture

Digitalization can also provide benefits in production; the Hanover Trade Fair 2013 was dominated by the theme of integrated manufacturing. Right on the first day, the recom-mendations for action from the Research Council on the realization of the future project Industry 4.0 were presented to the German chancellor. Among other objectives, this pro-ject aims to strengthen Germany’s position as a production site in international competition while promoting the leading role of German factory outfitters. In the future, companies will in-corporate their machines, warehouse systems, and operating materials into worldwide networks in the form of cyber physi-cal systems. Intelligent machines will autonomously exchange information, production systems will be integrated vertically into value chains and horizontally into local value creation net-works which can be controlled in real time.

The vertical and horizontal integration in particular demands a holistic approach in the enterprise architecture. A one-sided approach to integration capability considering only the tech-nical elements must be avoided. Process, information, appli-cations, and infrastructure must be holistically planned and be in compliance with internal and external standards. This

becomes especially obvious whenever integrated, digitalized processes along the useful life cycle must be established across departmental boundaries. The complete digital support of busi-ness processes is a prerequisite for mining in full the advantages resulting from the redesign of process and production models. Ideally, this will be the case from technical development to after-sales processes, i.e., maintenance and customer care. Only then will it be possible (one example) to simulate the ergonomics for users or for maintenance work immediately in a 3-D room on the basis of the initial drafts for technical development so that a goal such as training of skilled personnel or the simplified localization of the sources of error can be achieved.

Getting started: reduce complexity

Surely there can be no doubt that digitalization will open up a multitude of new business opportunities. But at the same time, the consequences and relationships appear dauntingly complex. Where is the right place to start? How can companies concre-tely examine and implement the effects of digital challenges in their own process landscape? The rapid pace at which the digital transformation of business processes is proceeding is a source of tremendous uncertainty for many business people. What must I do so that the configuration of my products can be completely flexible? Where and how do I want to connect the digital and real worlds? How can business skills for a mobile, cross-partner customer communication be acquired?

Detecon’s answer: Use what is already there anyway. Every com-pany has an inherent architecture, the logic which organizes its business processes and technology. But more often than not, this is not explicitly transparent to people when they act. If you want to understand whether and where new digital business ideas can be meaningfully realized, an overall picture which pro-vides precisely the depth of detail important in each particular


case to the perspectives of those actively involved, from strategy to operation, is helpful.

The Detecon Digital Business Transformation Framework con-sists essentially of three elements:

• Asimple,modularskillsmodel(capability-basedplanning).Scalable for every intended use so that only the complexity necessary for a specific task is considered. This might be an examination of the capabilities required by a plant for the manufacture of the planned product. Each capability encom-passes three dimensions. The material dimension, for example, describes the demands made on machinery and embedded systems. The process dimension defines the concrete require-ments for information exchange and process integration. The dimension “People” describes the organizational aspects and the necessary knowledge and expertise.

• An information model which utilizes the modular skills model to look at the special aspects and perspectives — for example, the development of operating and investment costs in the area of CRM across organizational boundaries and all levels of the architecture, in each case in the “as-is condition” when the projects which have been planned and initiated are carried out and in the “target condition” when the modifications in strategy currently under discussion are put into practice.

• Acommonapproachfortransformationsothatconsistentand up-to-date information is generated and can be used to assess the present progress status of the projects. The architec-ture development method of TOGAF (Open Group Architec-ture Framework) can be recommended for this work.

What happens now in practical terms? Where must investments be made and according to what priority? How rewarding will the integration of new corporate partners be? Tools such as the

Canvas business model, freely available on the Web, can be used to collect the strategic requirements. The results from the ap-plication of methods such as Canvas can easily be translated into a tool-supported capability map. Business IT management tools such as “planningIT” are helpful and can be used as an “information elevator” which brings up information in the ap-propriate depth of detail and implementation stage from the modular model of the company. Target visions and scenarios for the future IT and process organization can be thoroughly discussed in this phase.

If, for example, a company wants to select and introduce new collaboration models with partners for a digital strategy, one concrete result of this approach could be that new capabilities in the area of mobility service management are decisive and that the previous CRM landscape will have to be revamped for this purpose. The analyses of the scenarios will then reveal that the project risk in this case is slightly higher than in the case of a restructuring, but that significantly more integration opportu-nities for external partners in the future will be created.

Finally, the digital world does not fall like manna from heaven; pragmatic steps must be taken to jump-start the transforma-tion. Detecon’s approach of being able to rely successfully on transparent enterprise architecture management at any time and as appropriate to a specific situation should enable a compa-ny to assess the impact of changes within a short time. This is normally a highly complex task because there is often little transparency about concrete operating consequences in the corporate divisions. But without it, companies will not be pre-pared to track down the innovations critical for their success without delay and initiate their realization.

Uwe Weber is Managing Partner and founder of the EAM consulting depart-ment at Detecon. He and his department have been advising international com-panies from a broad diversity of industries on the introduction and implemen-tation of EAM for eight years.


New Role as Manager of the Customer Experience

Service companies must reposition themselves in the digital world. Their central focus needs to be on customer interaction. This requires an adaptation of existing assets and capabilities as well as significant investments in the factors information and digital trust.

Digital Business Models in the Service Sector

oday’s customers, especially in the service sector, expect flexibility based on customized offers and service delivery, low prices, excellent customer service, and links to their digital world of smartphones and tablets. Consumers want to interact with service providers quickly and easily, and on on their own terms. Digitalization opens up these opportunities and is driving this behavioral change.

Observe: competition from the digital world

Large traditional service companies typically rely heavily on pre-defined processes for their operations. They frequently struggle to meet these new customer demands. The retail sector has seen once illustrious names such as Sears in the US or Neckermann and Quelle in Germany struggle. They were attacked and pushed away by new players such as Amazon or Zalando. New providers in the financial services sector such as PayPal or Lending Club have also proven to be more in tune with customers who are networked with one another, who are part of the “always on” society using mobile end devices for their financial transactions, and who move back and forth between online and offline channels without the slightest hesitation. There is a very real danger for many traditional financial service providers that their reactions to the new customer demands will be inadequate or too late.

Moreover, many traditional service companies are frequently characterized by large infrastructures. Utilities and telecommu-nications companies as well as banks and retailers with a large network of branch offices have their business operations tied to broadly distributed physical assets that tie up capital. Com-pared to the new, largely Internet-based companies, they find themselves under increasing pressure to cut costs and find the financing they need.

As a consequence of all of the factors discussed, the service sector is subject to an especially strong impact from the rapid develop-ment of information and communications technologies (ICT),

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making it a pioneer for “digital transformation”. Nowadays, ICT is no longer restricted to enabling efficient performance (production), but has become a decisive element in the per-ception of the service offering and the customer interaction. “Leading Digital” is not an option in the service industry – it is an absolute business necessity to gain customers’ attention and win their loyalty. New, agile business models can appear at any time and pose a serious threat to the existence of supposedly firmly established players.

Rethinking: new definitions of business models and service portfolios From these trends we expect significant changes in future market roles and the factors of future value creation. Strictly vertical business models will lose ground while horizontal mar-ket roles will develop. Specifically, such roles will include the manager of the customer interface, who understands the custo-mers’ language, develops a solid foundation of trust with custo-mers, and integrates them into the service delivery; the platform

provider, who assumes the role of coordinator in the value creation network; and the infrastructure operator, who integrates the industry infrastructure and the ICT infrastructure so that the core services can be made available to other providers. In this picture, stores and offices in the retail sector, logistics net-works in trade, or the energy grids and railroad networks are typical examples of what we call industry infrastructure.

Because of the assets they hold and the resulting intertia, traditional companies can quickly find themselves pushed into the role of the industry infrastructure operator. It is unlikely that this part of value creation will be able to offer significant fu-ture growth potential and it is characterized by high pressure to raise efficiency and strong scale effects. Companies that want to participate in growth markes will have to look closely at where future value will be generated in their markets and what additi-onal roles they want and are able to assume. There are essentially two directions in which companies can move if they want to break out of “standard business”, i.e., the role of the industry infrastructure operator, and want to keep pace with market

Source: Detecon

FUtURe HORIzOntal MaRket ROleS FactORS OF FUtURe ValUe cReatIOn

Manager of the customer interface

Platform operator

transaction

Information trust

Infrastructure operator

Industry infrastructure Ict infrastructure


developments. One is for service companies to develop into a market role which takes care of the operation of a platform (see also the article “Good Connections” about the energy industry on page 38); the other is for them to strive to fill the role of manager of the customer interface.

Understand: new competencies for interacting with customers

If we observe the market developments and consider the characteristics of successful (new) companies in the service sector, we determine that the role of manager of the customer interface is characterized by three major success factors:

(1) Transaction: This factor represents the starting position for most of the traditional companies in the service sector. It embodies the structure of the core business of today which is based both on industry infrastructure (physical assets) and on process competence. The key task for a manager of the customer interface is to change from a supply-oriented to a demand- or customer-oriented business logic. Using comprehensive know-ledge of customer needs, they have to shape – while constant-ly reinventing themselves – the “customer experience” and orchestrate infrastructure components from which innovative offers for customers are developed. A manager of the customer interface pays especially close attention to a simple usability of the offered services and the integration of customers into the creation of the service, e.g., through mass customization, customer self-care, and “prosumer” offers.

(2) Information: This is a factor steadily gaining in significance. Information is the currency of the digital world. As a factor in value creation and competition it encompasses the utilization and analysis of internal and external information sources for the enrichment of a company’s service portfolio. This covers both the capability of carrying out data analyses to enhance business operations – typically the domain of business intelligence – and combining existing products and services with added-value information components. Examples range from QR codes and mobile apps that provide information to consumers in stores or travelers in trains to financial market data compiled out of transaction patterns.

(3) Trust: Trust has to be established before customers before make any decisions about buying or entering into contractual relationships. Trust can be placed directly in the company – a core element of every brand strategy – or, in the age of social media, generated via communities. Banks as an example have suffered an enormous loss of general trust since the start of the financial crisis. Trust derived from networks which com-panies either shape or which they can join as members is less vulnerable. This type of trust is exemplified in the relationships between buyers and sellers on Amazon or eBay or on networks such as Facebook or Twitter where companies and customers can enter into a dialog with each other.

The three factors discussed combine to create a magic triangle in which companies must position themselves in the digital world. As of today, only a very few companies have succeeded in addressing even two of these factors, and finding all three of them in one enterprise is rare indeed. Amazon is one example of a company which manages and exploits all three factors:

• Transaction:carefulmanagementofcustomerrelationshipsand direct selling of goods,

• Information:unambiguousidentificationofitemsbytheuseof the Amazon ID and the provision and processing of masses of additional information about the products in the form of pictures and descriptions,

• Trust: provision of personalized recommendations reviewsplus opening up its market places for 3rd-party sellers.

Service companies wanting to take advantage of the success factors must build up new competencies and modify their business models. “Leading Digital” refers on the one hand to the revaluation of existing assets and transaction competence, and on the other hand to massive investments in the factors information and digital trust.

In the following, we make use of a practical example to illustrate the necessary modifications and the required competencies which enable companies to master the digital transformation and to establish itself as manager of the customer interface.

We see a trend from transaction-oriented to service-oriented business models within the retailing sector, especially driven by e-commerce. One example is subscription commerce, which uses flat pricing models for regularly purchased consumables. Amazon offers “flat rate” models of this type for diapers, shaving creams, and similar products.

Retailers use this new business model to develop longer-lasting business relationships and hence a greater customer loyalty. The benefit is a constant revenue flow and an increase in the share of wallet for these customers. Moreover, cross-selling potential is created by a more precise knowledge of customer needs.

What are the competencies that a retailer has to build up for successfully establishing such a new business model? We illustrate the required competencies along the three dimensions of transaction, information, and trust:

(1) Transaction: Traditional retail business models focus on the one-time sale of products to a anonymous customer. They were strongly by a supply side logic. In contrast, subscription commerce is not possible without having the capa-bility of managing long-lasting contractual relationships. Here, the focus is set towards the customer. In addition to the relevant process and system requirements that are needed to handle long-term business relationships – such as billing relationships, master data and creditor data management, automatic triggering of processes and payment transactions – CRM and multi-channel competencies are particularly new and critical for success.

(2) Information: Fundamental elements of a service portfolio which takes into account the individual situation of each customer – such as consumption forecasts or changes in size – require intelligent data management and analysis. Our example of the “diaper flat rate” focuses on young families as target customers. The offered products are differentiated according to socio-economic criteria. Besides the basic CRM, an excellent knowledge basis regarding the customers and their (family!) needs – the key word here is customer profiles – is essential. This is the foundation for a competent hotline, dissemination of regular information to the customer, digital shopping lists and receipts - including mobile apps, and overview of products and deliveries. The data obtained here can be evaluated and utilized for customer value analyses, cross-selling and upselling campaigns, as well as for sophisticated consumption forecasts.

(3) trust: In traditional transaction-oriented business models the business relationship is revived at every new trans-action and the customers’ trust is placed primarily in the quality of the product. In contrast, subscription commerce aims at long-lasting relationships with consumers. A subscription model requires a large amount of personal data that needs to be collected and analysed to generate a customer benefit. Hence, customers have to reveal far more about themselves than they would in common purchasing situations. Therefore, the business model requires greater trust of the customers in the retail company. Customers open themselves up to retailers – consequently they must be sure that the product delivery stays attractive in terms of pricing irrespective from changes in his individual situation (phase of life). Consumers no longer need to worry about satisfying a certain need of theirs; they rely on the retailer to take care of their individual needs.

Such a business relationship that is built on trust puts greater demands on the retailer with regards of to customer care, evolution of the product line, and attractiveness of the price of the products. To keep a service customer-friendly, a number of partners such as delivery services must be orchestrated. Integration has to be ensured on a technological, organizational, and commercial level, e.g., incentive systems for the partners, interfaces for data exchange. The retailer’s accountability is not limited to the performance of its service, but extends in particular to the quality of the perfor-mance of its partners. Consequently, the retailer has to establish a rigorous quality management for his value creation network.

Learning: building up competencies


Dr. Volker Rieger, Managing Partner, advises clients in the energy and telecommunications sectors, aiding them in the development of new business models in the context of the digital transformation.

service companies will need to take decisive actions to influence its direction and to occupy future-proof positions on these evolving markets at an early stage.

This will require a rethinking of most service companies’ busi-ness model. Without that they will not succeed in adapting to the changes in customer demands and the rising pressures on costs and financing for existing assets on the one hand and uti-lizing the new possibilities offered by technology on the other hand. Decision-makers in service companies must therefore find answers to the following key questions if they are to deter-mine the maturity of their own business model and identify the relevant needs for action:

• Towhat extenthasdigital transformation commencedonthe markets relevant for my company?

• Where does my company want to position itself in thenewly evolving market environment: away from the role of the business operator of infrastructure and toward the role of the dynamic manager of the customer interface?

• Howstrong ismycompany in thedimensionswhichwillpresumably define the role of manager of the customer inter-face: transaction, information, and trust?

• Howcanmycompanyenrichitsexistinginfrastructureandcustomer base with the factors of information and trust so that new business models and service portfolios become possible?

• What rolewill the ICT infrastructure play formy futurebusiness models? How do I connect the two infrastructure areas?

Workshop on “Identifying new Business Fields” We support companies during the digital transformation of their core business by working out specific business model frameworks for each particular sector. Within the scope of workshops we can offer to our clients:

• Stimuli: best practices from other industries in different maturi-ty phases of the digital transformation

• Modeling and visualization: team-oriented creation of new digital business models with interactive and customer-centric methods like design thinking and the business model canvas

• Evaluation: joint assessment of the market potential of the new business models

• Feasibility: review of the new business models to determine their feasibility

• Needs for action: identification of requirements in relation to the new value generation factors

• Implementation approaches: timeline showing the initial con-crete steps

act: what must be done, and where do you start?

The transformation of the markets – and with it of the “traditional” business models – in the service sector has alrea-dy begun. Even though it is not possible from today’s perspec-tive to obtain a full overview of where this transformation will ultimately lead, the development cannot be stopped. Traditional


Future Store Concept

ICT as an Integral Component of the Branch Store of the Future

elecommunications and media companies were the first who had to face the innovation pressure and agility of companies such as Skype and Google. The ICT-driven transformation of core business has begun in brick-and-mortar retail trade as well. In keeping with the slogan that “trade is change,” trading companies in all segments are called upon to build up quickly competencies in new technologies, to identify applications which generate enthusiasm among their customers, and integrate them efficient-ly into existing structures and processes. The cornerstones for the branch stores of the future must be laid today!

T

Information and communications tech-nologies are driving forward the struc-tural transformation of entire industries. In retail trade, the largest department store in the world, Amazon.com, causes mail-order businesses such as Quelle and Neckermann to sink into oblivion.

The pertinent technologies are about to reach the necessary maturity level, including economies of scale (example: RFID) or a significant market penetration (example: smartphones). Others, such as NFC for mPayment, are being pushed by the interest of companies from other industries or are evolvements from existing methods, such as big data in data analysis. The decisive issue is often one of a skillful combination of various technologies.



Customers increasingly expect to experience the advantages of online retail trade in the branch shops as well. These expectations can be met by brick-and-mortar stores if they combine their inherent strengths such as haptic experiences with the com-prehensive information and evaluation opportunities found in digital channels so that they can keep target groups with high buying power like the “digital divas” in the store.

The bottom line is that the complete digital mirroring of all store-related business processes and the subsequent availability of information regarding all resources at virtually any time promise substantial increases in efficiency in all aspects of branch store operations – from ordering to optimization of the product line. If retail trade companies exploit the technological possibilities to generate a cross-channel added value, this will have a positive impact on customer loyalty and new sources of revenue.

New technologies also create possible ways to improve the custo-mer experience by increasing convenience for the customers. One example of this is the personal shopping assistant, which basically exists in two forms: installed in the shop, e.g., on the shopping cart, or as a digital, often mobile solution in the form of assistants or shopping lists in a smartphone app. Convenience for custo-mers is also increased by “augmented reality”. After shops have closed, customers can continue to shop in virtual shop windows or try on clothing virtually, provided that the real world has been enriched by the addition of digital information. Modern video conference solutions in fashion stores make it possible to include a friend in the experience – whether on the cell phone, via Skype, or in HD/3-D quality on the television set at home.

Mobility and the increasing utilization of mobile end devices also open up a new interaction channel for advice, marketing, or even sales for retailers. New technologies and channels on the purchasing side also support the enticement of changing product lines. Online platforms such as Seedyaa serve as wholesalers for designers, small labels, and manufacturers. They enable retailers to offer unique products as part of a custom expansion of the product line which was in the past possible only by major invest-ments of time and money in research and orders.

The magic word heard over and over again is individualization! If the right data analysis is available, one might imagine the creation of profile-based recommendations for cross-selling via smartphone app or personal shopping assistant; thanks to goods management systems capable of real-time operation, they could include customer-specific prices based on the actual availability in the shop. Even today, it is a must for brick-and-mortar retailers

as a minimum to be present on additional channels – it is even better if they actively design them. That requires having the capability to orchestrate their own value creation across channel boundaries. Moreover, it is becoming apparent that ICT-driven transformation is going beyond the integration of new services and leading to the creation of new types of business models, including the roles which must be filled. Critical success factors here are the availability of all of the necessary information and data as the asset of the retailer, strategic partner management, and, finally, actual collaboration with external partners – at all levels. So ICT-driven business models mean a substantial “mind change” for a retailer.

An overarching concept is required to realize the full potential of information and communications technologies for the core business of retail trade. First of all, the specific strategic frame-work conditions for ICT-driven changes in the company itself must be defined (“Where do I stand with respect to ICT-driven transformation?”), then the market and technological trends must be observed (“What is possible?”), and finally a company-specific, qualitative, and commercial assessment of the new services and business models must be carried out (“What makes good sense for me?”). The result is a short- and middle-term road map for the ICT-driven services and technologies relevant for the compa-ny. The mirroring of the resulting demands on existing resources and competencies of the company in the areas strategy, organiza-tion, processes, data, and architecture reveal any gaps which exist (“How can I realize it?”).

Integrated ICT architecture becomes especially important here. It must be able – far more so than the existing system landscapes, which tend to be heterogeneous – to model the new require-ments and to gather data from many diverse sources in virtually real time, to process them, and to make them available to many different interfaces via authorization concepts which can be con-figured flexibly.

Dr. Britta cornelius is Managing Consultant and advises most of all retail trade companies with regard to strategic and organizational issues.


From a Telecommunications Service Provider to an IT Service Provider

New Business Fields for Telecommunications Companies

espite the constant stream of innovations in the product portfolio of many mobile and fixed network service providers, telecommunications revenues around the world are stagnating. Massive competition and the saturation on many markets are driving prices downward and cutting into profits. A feverish search for new sources of sales and profits is going on. Percep-tively, the renowned TeleManagement Forum has placed the search for new business fields at the focal point of its annual out-look “Perspectives 2013 – Smart Services – Smart Business”.

Initiating a reorientation

The digital transformation of society and business identified by Detecon as a key trend of the future brings with it tremen-dous opportunities. Digital transformation encompasses the comprehensive transformation in enterprises and in society from the use of software, networks, and information technology.

D While these changes have opened the floodgates to new products and forms of consumption, they are also changing the rules and the roles of competition: more and more companies whose core competencies are actually located in completely different areas must today become intensely familiar with information techno-logy and consequently require help from competent partners.

As a rule, telecommunications companies maintain large IT de-partments which ensure the reliability of ongoing operations and the development of solutions for CRM, billing, and network ope-ration. These services are also of interest for external customers. Deutsche Telekom AG and its subsidiary T-Systems have shown how profitable IT services packages for large customers all around the globe can be compiled. Subsidiary STRATO serves the needs of small and midsize companies for cloud services. The American mobile network company Verizon has also created another source of business for itself with cloud services.

The world is going digital. The growing need for basic IT services could be covered by telecommunications companies in the future.


enhancing precision of business model

Are IT services genuinely an opportunity for growth for telecom-munications companies within the framework of digital transfor-mation? And what are the success factors? As is true of every busi-ness case, there is no “one size fits all” answer to these questions; a number of aspects must be considered from various angles.

What might a well-structured product portfolio look like? At its core are services performed in secure computer centers with a high level of reliability, i.e., cloud services. They include the pro-vision of server infrastructures (IaaS), platforms with basic func-tions (PaaS), or complete application environments (SaaS) which provide a ready-to-use function such as a CRM solution. In ad-dition, there are services which are more likely to be in demand from larger companies such as the leasing of space in the com-puter center (co-location), outsourcing of operational activities, and system integration. All of these services must be produced in highly efficient processes and with maximum reliability and security.

What customer segments should be addressed via what distri-bution channels? Most telecommunications companies today serve both end and business customers and consequently have contact to all kinds of companies, the most widely diverse in-dustries, and large as well as small companies. While this means a broad range of business opportunities, it also entails a complex structure of customer relationships covering completely different ranges in the service spectrum: on the one hand, small companies which purchase standardized, pre-fabricated cloud solutions such as Web shops from self-service portals; on the other hand, large enterprises which require individual support and services, out-sourcing, and system integration.

Then there are the many different factors which influence the business model. What partners are needed? Are there any addi-tional revenue sources such as advertising? What market volume and potential are waiting to be mined, and what competition must be faced?

Mastering challenges

CIOs in particular are presented with the opportunity to repo-sition their departments, even themselves, as business partners through the build-up of a new IT business field. Nevertheless, they must deal with many different challenges. The key issues revolve around the exploitation of synergies and know-how trans-fer from the internal IT department to the production unit for

external customers. We can assume today that all telecommu-nications companies have experienced a series of cost-cutting programs. Staff in the IT department has been reduced to a minimum, and many of the tasks which are not part of the core business have been outsourced. CIOs must begin by replenishing suitable personnel resources or acquire access to them from part-ners before they can begin to act on behalf of external customers. Their primary support will come from executive associates; however, the involvement of these people in everyday business represents potential for conflicts.

The build-up of the new production capacities begins with the selection of an organizational structure. Should internal and external IT services build on common structures, or should they be strictly segregated from one another? The first variant enables efficient utilization of technical and staff resources in combina-tion with organic growth, especially during a build-up phase. But if the personnel coverage is spread thin, the prioritization of in-ternal over external services, particular during the start-up phase, can be a trigger for conflicts. Moreover, controlling is frequently not set up for the exact tracking of costs on a project or customer basis and instead supports analyses at the cost center level. In the long term, these considerations present a strong case for the build-up of a separate organizational unit for external IT services. This unit will require independent strategic and operational business and investment budgeting, appropriate monitoring and controlling instruments, highly automated provision of services, powerful security mechanisms, and associates with a pronounced orientation to the customer.

Be successful

The transformation from a telecommunications service provider to an IT service provider within the framework of digital transfor-mation offers plenty of opportunities for business development. The path is not an easy one. The example of Deutsche Telekom, however, demonstrates how successful a business model is when it can be precisely steered with the aid of strategic analyses and decisions.

Johannes ewers is a Managing Consultant with interna-tional Clients. His focus is on IT Strategy, Architecture and Service Management.

Whenever new technologies appear on the market, they quickly land in Gartner’s hype cycle in the ICT industry. From the exalted peak of exaggerated expectations, they rapidly slide downhill into the valley of disappointments before an innovation reveals the path to enlightenment. But very few of them actually make it this far: among this select group are cloud computing, big data, and mobility. As technology becomes more and more easily accessible, they are the forces transforming the relationship between IT departments, busi-ness units, and customers.

Reinhard Clemens, CEO T-Systems, about the Cloud

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“The Cloud is not a Self-Service Store”

Reinhard Clemens has been a member of the Deutsche Telekom AG Executive Board and CEO of T-Systems since 1 January 2007. The holder of a degree in electrotechnology has also been in charge of all of the Group’s IT activities since 1 January 2012. Clemens had previously been at EDS in Germany since 2001, serving as CEO and in charge of sales, business opera-tions, and strategy in Central Europe.


hen is an innovation disruptive? When it pushes aside existing technologies, products, or services, according to Wikipedia. The thesaurus tells us that a disruption is upsetting, disorderly, destructive. The IT industry has a tendency to be all too hasty in designating innovations as disruptive. After all, most IT technologies are forgotten as quickly as they appear. However, the phase now being experienced by the IT industry is disruptive in a number of ways. Cloud computing, mobile solutions, social media, or big data are phenomena with major impact on companies, no matter what the size or industry, and are enhancing the focus on IT in business and society more than ever before. They open the doors to new business models and additional business opportunities. But they are also transfor-ming the relationship between IT and business departments be-cause the consequent consumerization is stripping IT of much of its former mystery. “The disruptive technologies of the cloud, big data, social media, and mobility have the power to trans-form radically our classic business world,” is the conviction of Gartner analyst Dennis Gaughan as well.

Self-service in the cloud

As business units seek to adapt their business models and align them more closely to customers, they require IT solutions which enable the realization of the relevant demands. Inevitably, these technologies are changing the perception of roles in companies. If their own IT does not provide them with the necessary solu-tions, the business units simply take off on a shopping excursion to the cloud. According to IDC experts, business units today buy 25% of the software they need on their own initiative, by-passing the IT departments completely, and about 60% of all IT expenditures are transacted in collaboration with the business side.

The change has not gone unnoticed by some CIOs. “In the fu-ture, cloud providers, for example, will no longer sell IT com-ponents to CIOs,” believes Phil Colman, CIO at British Ame-rican Tobacco. “Instead, they will sell comprehensive business solutions straight to our marketing and supply chain directors.” These executives want to receive information and analyses in real time so that they can steer marketing campaigns more precisely

close interaction between business and It

The best analysis is in and of itself not a competitive advantage. Differentiation comes into play for products and services. Ama-zon revolutionized the business of selling books; the e-reader represents a transformation of the book itself. Digital cameras drove the photo pioneer Kodak into bankruptcy. Apple, Spotify, and Juke are hitting the music industry hard. Google News has thrown the news market into disarray. Neckermann and Quelle have disappeared, while OTTO and Zalando are flourishing. All of these developments are driven by proximity to the customer in combination with an extraordinary user experience. “Success-ful business models take the fast, transparent, and direct road to the customer,” says Wolfgang Schwab from Experton Group. “Companies have no choice but to steer their IT processes in this direction. Without background support from technologies, any kind of positive performance by the business side will be al-most impossible.” IT officers, according to Schwab, must “take demands seriously and convert them into technical solutions.”

Examples such as Zalando or Amazon all have one thing in common: they are based on close interaction between busi-ness and IT and create a new dimension of proximity to the customers – one might even say that of zero distance to the customer. This immediate proximity is a company’s basis for “customer excellence”. Exploiting more precise information from thousands of data sources to generate a perfect picture of customers, integrating them into the business and marketing processes, responding faster to their needs: this is the new world which demands a contribution from IT departments.

Thanks to the cloud, apps, and mobility, the days of IT depart-ments no one understands and of the “dumb” user belong to the past. More and more often, decision-makers themselves make the effort to mine the business potential of ICT. By 2015, business units will be investing more than €100 billion in IT – without going through the IT department. While this will put additional pressure on central IT departments, it will also turn them into an important link. This is the trend which will con-tinue to drive the subjects of standardization and automation, together with cloud services, in the classic IT sector.

But what form will the required transformation of corporate IT take? How will legacy systems be transferred to the cloud, existing systems enhanced by cloud resources, applications mo-dernized and mobilized? All of this without disrupting opera-tions? As a rule, the IT department is the only entity with an an-swer to these questions. This is the knowledge advantage which enables IT to correct the relationship structure to the business side which has been in place for so many years, moving from the traditional role of contractor for marketing, sales, or HR to becoming an enabler of the business. “CIOs are not limited in their knowledge to business processes and strategic goals. They are observers of new developments which can influence busi-ness objectives,” is the conviction of Experton analyst Schwab, “so they can protect the business side from making the wrong decisions.”

or give immediate feedback about product shortcomings to the development units. In short: their goal is to integrate customers into business processes so that the actual needs of the market can be served. More and more often, the required solutions will come from the cloud.

It officers as drivers of business

Viewed against this backdrop, we see why IT service provi-ders and CIOs in companies must recognize and understand what will advance the aims of the business units. Rather than administrating rigid IT systems, IT officers in the future will steer and manage dynamic IT services from the cloud and utilize big data to assess information relevant for the business, in the process themselves evolving into business drivers. They will compile millions of bits of unstructured information from social media channels, link them with existing data – from CRM and ERP systems, for instance – and analyze them as a whole.

Key word: big data. In the world of IT, data stand for know-ledge. But the volume and diversity of the data are so over-whelming – 90% of all stored data have been created in the past two years alone – that little effective use has been made of this knowledge. Today, 85% of the 500 companies with the highest revenues are not in a position to analyze meaningfully these (largely unstructured) masses of data at all, much less in real time. Yet this is exactly what will be required in the future if companies want to offer location-based services tailored to the specific demands of each customer.

Retailers doing business online acquire data in the millions, but very little of this information has ever been analyzed in real time. Anyone who merges these data with user informa-tion from Internet forums, blogs, and social media will be able to come up with new impetus for product development and services. The energy turnaround is another example of how big data can be used. The outfitting of households with intelligent electricity meters, as called for by the European Union, and the rising amount of power generated from renewable and localized sources will confront power providers with completely new demands. If 40 million smart meters send consumption data to the utility companies every fifteen minutes as planned, about 3.8 billion data records will have to be processed every hour. The task will be virtually impossible without big data. Based on the analyses, electricity producers will control power genera-tion in real time, supply contemporaneous information to their customers, or offer new rate models specific to each individual’s consumption habits.

These are just two examples which show why big data will be one of the most significant IT topics in the coming years. In-vestments for big data in 2012 were directed first and foremost at hardware and software. By 2016, the share of big data services is expected to rise to 43%. Total revenues related to the subject of big data will grow rapidly and overproportionately until then, tripling to €15.7 billion.



Zero DistanceThe New Proximity to the Customer


Yesterday still a start-up, today billions in sales. Traditional market leader for decades, today the number one online. The winners all have one thing in common: their activities are radically customer-centric. The losers, on the other hand – including renowned firms with a time-honored tradition – have failed

to realize that the customers and their needs are the new kings of the market. This failure frequently ends in bankruptcy.

W hen, only four years after going live, the mail-order shoe retailer Zalando from Berlin has sales of a billion euros, has established a solid position on 14 markets in Europe, and enjoys brand awareness of 95% at home, the established incumbents quickly find themselves driven into a corner. The same is true of the mail-order retailer Otto – now second only to Amazon as a universal mail-order business. Simultaneously, traditional businesses like Neckermann are forced to file for bankruptcy.

The companies enjoying success today act quickly, simply, directly, and transparently. They have positioned themselves in the “Age of the Customer” and created a radical new proximity to customers, employees, and data. The shop or the service co-mes straight into the customers’ homes. Tablets, smartphones, and their relations are the new store counters, and social media have become a part of the value creation chain – “zero distance”.

When the shop comes to the customer

Example: the British supermarket chain Tesco. Its virtual supermarkets in South Korea’s subway stations revolve com-pletely around the customer. Orders are placed by QR code and delivered right to the front door. Within only a few weeks, the company developed into the country’s market leader for Inter-net food sales. The foundation for success: the unbroken ICT chain operating behind the order process, payment processing, and precise management of the delivery logistics. Banking is another case. Operating strictly online, ING-DiBa today has 7.5 million private customers, making it the number one among online brokers and the third-largest private customer bank in Germany. It has achieved this position without a single brick-and-mortar branch, but it maintains 1,200 ATMs through out the country.

The formula for success followed by all of these companies is the determined use of so-called disruptive technologies. Analysts at Garner claim that, when bundled, cloud computing, big data,

social media, and mobility have the power to “transform our classic world of business radically” because they eliminate bar-riers of distance and more or less shorten the paths to compa-ny staffs, available data, and potential customers to zero. Never before has information and communications technology been so decisive for the success of business strategies as it is today. Business units have grasped this fact and are learning to take care of themselves when it comes to IT by drawing on cloud-based solutions.

Who will make the decisions to buy It in the future?

CIOs are essentially being squeezed from two sides. First, their own users – the ones who want to work anywhere, anytime, regardless of the device they use – and the business departments – which, driven by the demands being made on them, are allo-cating their own budgets for the purchase of IT solutions – are applying pressure. Second, they must deal with market events fired by IT consumers right on their doorstep. The role they will play in the future will be determined in particular by the speed with which the IT departments can carry out the tasks deman-ded of them. Take the matter of investments, for instance. The question of “who recognizes more quickly what benefits busi-ness – the business unit or IT” will become the criterion for determining who makes IT purchase decisions in the future.

IDC experts, in any case, assume that even this year almost 60% of all IT expenditures in companies will be decided in direct consultation with the lines of business. So CIOs must transform their corporate IT into dynamic provision models and move into the cloud. This will enable them to enhance legacy systems by the addition of cloud resources and to modernize and, ulti-mately, mobilize applications. If their efforts in this direction meet with success, IT will grow from the traditional contractor for marketing, sales, or HR into a business enabler – making zero distance possible.

The desire for business applications which are as easy to use while on the go as consumer apps is the source of a growing number of confrontations between employees and business units on the one side and the IT department on the other. One thing is certain: CIOs must find an answer to the simplification virus.

n Germany alone, more than 300,000 university graduates enter the labor market every year. They come with very definite expectations about employers and the scope of their duties and responsibilities – and about the IT equipment they find at their workplaces. The motto for many of these digital natives or members of Generation Y: Keep it simple. “This simplification virus,” notes Thomas Spreitzer, Director Marketing T-Systems, “has long since spread from Generation Y to infect users of all ages in the company. They all demand IT applications, whether at their desks or on mobile devices, which are as quickly avail-able and easy to operate as the apps they use privately. We do not believe that this is a passing phenomenon which companies can wait out until it has run its course; it is a trend which must be taken seriously, and we have come up with the term ‘Genera-tion Easy’ to describe it.” This generation wants its cooperation with colleagues, partners, and customers to be as simple as the accustomed interaction using Skype, Facebook, WhatsApp, or Dropbox – including all of the smartphone or tablet versions.

I

Simply Simple

IT Department in Focus

The total penetration of IT into private and professional daily life in the form of apps, cloud computing, and powerful end devices now impacts the behavior and needs of employees from other generations as well.

Prohibitions have no effect

CIOs will have to adjust to the demands for this new form of freedom. And they need to do it soon. The keep-it-simple fac-tion does not hesitate to realize its desire for simple IT tools even without the help of the IT department. “Prohibitions do not do CIOs any good,” says PAC analyst Dr. Andreas Stiehler, “but unconditionally caving in to every request is even worse.” IT bosses still have a hard time accepting and managing many different end devices, no matter who the manufacturer and what the operating system, even though this is technically pos-sible thanks to unified communication and collaboration tools (UCC), virtual desktop solutions (mobile device management)


from the cloud, or mobile enterprise solutions. Companies have to revamp their infrastructures before these solutions can be used. Stiehler: “There are two options: either integrate so-cial media tools and bring-your-own-device solutions securely and issue clear instructions about the compatibility of business data with Dropbox and others, or offer employees enterprise IT alternatives to Facebook, Skype, and all the rest.” Without protection of the applications critical to business operations and of the company and customer data which employees can access around the clock regardless of their location, risks are preor-dained. So the word is SharePoint instead of Dropbox, WebEx instead of Skype.

There will be no stopping the keep-it-simple trend, as is shown by one example from an industry which deals with important customer data every day and is regarded as rather cautious. When Samet Yilmaz began working at KPMG in 2011, Skype, Dropbox, or USB flash drives were strictly prohibited in the accounting and consulting firm. But at least the company allowed its employees, starting on Yilmaz’s first day of work, to use an iPhone instead of a BlackBerry as the company cell phone. KPMG had understood how the company benefited from its employees being able to work under familiar condi-tions as far as possible: “That generates identification, motivates staff, and raises the level of productivity,” Yilmaz is certain. If the senior associate and his team want to work together on the revision of Excel files for a client, coordinate presentations with “MS Project”, or code and modify their workflows via “Visio”, they can use the SharePoint upload “Live Meeting” offered by KPMG as an alternative to Skype. The company will also be introducing the social media service “tippr”, starting in October, a crowd information sourcing platform which will significantly simplify the employees’ teamwork.

The company’s own iPhones at KPMG have been outfitted with a password-secured “Good App” as the entrance lock to the in-house VPN tunnel. It encapsulates and encrypts corporate and client data and strictly separates business from private ap-plications of the users. If a cell phone is lost, it is shut down by remote command, and all of the business data are immediately available for use on the replacement. The consultant can use his private iPad in exactly the same way – with the approval of, and an access card from, KPMG.

Risks of the self-service mentality

“IT bosses must learn to be more open,” says Dr. Markus Müller as well. “Otherwise,” believes the Deutsche Telekom CIO, “we will put ourselves at risk of a virtual self-service tsunami – every employee will bring along the applications and devices into the company which the individual deems to be sensible, practical,

and conducive to the desired performance.” This self-service mentality can be counteracted “if IT bosses can determine today what desires the Internet will stir in employees tomorrow and offer appropriate alternatives which have nothing to fear from the competition of public tools.”

But where is the line between what associates want and what is feasible from the viewpoint of the CIOs? The boundaries are reached especially quickly when it comes to the integration into the legacy architecture and to the consideration of security concerns. Priority must be on “what benefits the company and, ultimately, the customer. Effective tools for collaboration as well as spatial flexibility in daily work fall into this category. As the head of IT, I am open to innovations here as well.”

When deliberating whether the “keep it simple” principle of many apps and devices from the consumer world can be trans-ferred to enterprise IT, CIOs will have usability really high on their list. The aim here will be “as the fundamental principle to select the few really good examples found on the market which many people know and use and to integrate them intelligently, but circumspectly, into the enterprise IT.” A major considera-tion when taking applications from the Internet will be to make the launch of unauthorized data queries impossible and to equip associates “with modern end devices and a qualified range of tested software choices so that unnecessary complexity can be avoided.”

Dr. Andreas Stiehler sees things in much the same way. Although tools and services from the social media sector suggest more speed and simpler, more transparent operation, many of them would not pass a test assessing their suitability for business, says the PAC analyst. “CIOs must integrate these tools from the flea circus of the So Me quadrant into their infrastructures, security, and processes in such a way that they cannot cause any harm there, or they must offer enterprise IT alternatives.” This will not pan out unless companies and their IT service providers ma-ster the secure integration of specific consumer applications and know how IT functions in administration can be made leaner. “That all costs time, IT resources, and money,” Stiehler points out, but it is worth the cost. “When associates enjoy their work, in no small part because the IT also functions without a hitch, it enhances their motivation and consequently their productivi-ty. In view of the battles to acquire qualified young talent that companies must fight today, employees will simply not accept more complicated processes and applications. They will just pull up stakes and head for the competition.”


Mobile Payment

On Its Way Out or Success Story?

Germans’ skepticism is a hurdle for “payment by cell phone” – that is how eco, the Association of the German Internet Industry, appraises the market for mobile payment solutions in Germany. But even though little movement is visible on the market at the moment, something is happening behind the scenes: an overview of the status quo by Armin Fischer, expert for mobile payment at Detecon.


DMR: Mr. Fischer, what is happening on the Germany payment market?

A. Fischer: The most important event this year will be the launch of MyWallet, a Deutsche Telekom product, in the next few weeks. Quite a few mobile payment solutions have been laun-ched in recent months – Yappital from Otto Group, for example, or genuine startups like PayCash. The savings and loans are now integrating NFC chips in their bank cards so that no-contact payment with the Geldkarte (cash card), known as Girogo, will be possible. There are plans to make this possible by cell phone as well in the future. PayPal, the online payment giant, has also introduced a new mobile solution known as “PayPal QR Shop-ping” to the German market.

DMR: How do these solutions differ from one another in their approach?

A. Fischer: For one, there is the matter of where you can use them for payment, i.e., on the Internet or in brick-and-mortar stores, the so-called proximity payments. There are also diffe-rences in the way payment is effected. One of the options for the Telekom Wallet is simple payment by credit card. The card data are stored in the wallet so that you do not need the actual card itself. PayPal QR Shopping, on the other hand, simply links the mobile payment app with the customer’s PayPal account. Pay-Cash takes yet another road: a prepaid account is topped up by bank transfer or credit card charge. Another important issue for proximity payments is the method by which data are transferred to the cash register. One – taking Telekom Wallet as an example – utilizes the radio technology NFC which is already available in some credit cards or the Girogo cards from the savings and loans. Customers simply hold their cell phones up against a retailer ter-minal for a moment – that’s it. Another method is the transfer of the data by barcode or QR code – the app generates a payment code which is read by a special reader or a second smartphone used by the retailer.

DMR: How do you see the providers’ chances?

A. Fischer: The jury is still out, but there are a lot of recent stu-dies which reveal certain trends. The criteria which are especially important for retailers when using any of the new payment me-thods are beginning to become apparent: the most important criterion, far and away, is security, but costs and the speed of the transactions are also significant. While most of these methods instill confidence with regard to security, there are differences in the other two points. The most critical factor for fast, smooth performance of transactions will be how well the providers can

integrate loyalty cards, rebate vouchers, and credit notes in their payment methods – Google Wallet, an NFC-supported method launched in the USA in 2011, demonstrates even today how these types of elements can be bundled into one single transaction.

The costs are a question of how or via what provider the payment is processed. Typically, charges for credit card transactions are higher than those for prepaid methods such as Girogo. However, there are other cost factors which must also be taken into account: the costs for cash register terminals, personnel training expenses, or the question of who bears the risk for defaults in payment, for instance. As far as the technologies themselves are concerned, I regard payment by QR code more as a transition technology until NFC is supported by a majority of the available smartphones. A recent study by EHI Retailinstitute in German retail trade shows that NFC enjoys the favored position today: 65% of the surveyed retailers consider NFC to be a promising payment technology, while just under 30% believe in the future of methods supported by QR code. NFC has already been implemented or is the subject of a pilot project at 22% of the large retailers. Another key point is of course the acceptance by customers: no retailer will offer a payment method used by only a very few customers for long.

DMR: Speaking of customers: what are the decisive criteria for them?

A. Fischer: The development as it is taking form now indicates that in the middle term all of the forms of payment and identifi-cation we are carrying around with us as plastic cards today will be stored in our smartphones. So the question is not so much what payment methods we will use in the future, but more what wallet application we decide is right for us. The criteria for selec-ting the app will be similar to those for a leather wallet: it must hold a lot, it must look good, and it must be practical. In terms of the app, it must accept integration of as many cards as possible, the programming of the user front end must be sexy, and it must be simple to use. The new element which will be added is data security. It encompasses the protection of the card data and bank account information as well as the question of how the wallet application provider uses the transaction data – the key word here is the “transparent customer”.

All in all, I expect telecommunications providers to play a leading role here in Germany. They are taking a wallet approach from the very beginning, one that is highly open for a broad range of different partners such as credit card companies, banks, loyalty partners, and retailers.

Inte

rvie

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Companies must plan their needs for digital transformation in three dimensions if they want to take advantage of the opportunities offered by digital trans-formation to increase value creation and performance.

nternet, smartphones, social media – the digital age has be-come inextricably integrated into our personal everyday lives. Much that was unimaginable only a few short years ago has al-ready become second nature to us. “Wikipedia” as the replace-ment for Encyclopedia Britannica, “Google” with an answer to every question, or personal reachability in almost every corner of the earth. But the changes brought about by digital evolution are not restricted to our personal environment. Companies above all are confronted with fundamental revisions in pro-ducts and service portfolios, operational business processes, and their dealings with business partners. Many of the changes are foreseeable – however, many are incomprehensible to us from today’s perspective.

The context “company” will become more complex and subject to faster change because of digital transformation, making it in-creasingly difficult to maintain our grasp on the consequences

I

Digital Map Reflects the Networking of Customers, Products, and Company

Management Model for Industrial Companies

for actions and decisions. But new digital business models will place companies in a position to exploit the potential on the customer, product, or service side as well as in operations.

Picture yourself entering a car dealership where you simply wave your hands to change the appearance of the car on a large monitor. You can view (and understand!) all of the details of the engine and the incorporated technologies, swipe the screen to add – as a realistic image – any desirable configuration you can think of, even decide what settings should be used for sporty, comfortable, or economical driving on specific routes, during any season, and for any driver. Can that be possible? Yes. Within the spectrum of digital transformation, many things will turn into reality, things which have previously been seen only in films, where we just shook our heads and dismissed them as being a part of a “distant future”.


Some companies have set up research and development projects aimed at expanding their digital capabilities. Nevertheless, many are barely capable of exploiting optimally the opportunities or of judging the mutual impact. Nor is the digitalization of prag-matic processes or the transformation of IT systems sufficient. New ideas and groundbreaking business models are much more essential.

The decisive point is a management model which describes the new complexity of the networking between customers, pro-ducts, and companies and which can serve as a signpost in the cosmos of possibilities. Clients should holistically plan a “digital map”, their needs for digital changes, in three dimensions.

This “digital map” enables companies to present the dimensions “customers”, “products and services”, and “enterprise and part-nering” within the specific context of the ecosystem and to judge their mutual impact on one another. These are indispens-able capabilities because digital transformation is far more than straightforward technology – it is the driver behind the increase of value creation and performance in enterprises.

Processes digitalized from beginning to end will very soon generate and further process information coordinated from technical development to customer service; indeed, there are areas where this is already happening today. Flexible produc-tion networks, in some cases virtual, will manufacture products almost immediately, at low cost, but in high quality. Can I add QR order codes to advertising spaces and use them as virtual shop windows? Can sensors in production immediately com-municate if the drill bit hardness has to be changed because small parts have been replaced? And why not have the smart factory running at full capacity all the time since I can manuf-acture completely different products there on the basis of elec-tronic blueprints from all over the world?

A pipe dream? Not at all. So it is high time to examine closely your own digital business strategy and to exploit what it can offer to the advantage of your own competitive position.

Drivers such as demographic change, the growth of mega cities, and disruptive technologies such as big data and social media will present major challenges to companies, as will other mega trends. But the significance and the impact actually inherent in these trends remain a complete mystery to many. One thing is crystal clear: the intelligent use of ICT, information and communications technologies, will be the decisive difference between winners and losers on the markets in the future.

Source: Detecon

DIGItal MaP

Data AnalysisAgile Supply Chain

Customer InsightCloud Services

Individualization

Digital Products & Services

M2M Communication

Crowd Sourcing

CollaborationService-Orientation

Digital Business Models

SecurityCustomer Experience Management

No Touch Services

enterprise & Partnering

Products & Services

cOnnecteDcustomers


Günter krieglstein is a member of the Executive Board and Head of Cluster “Industry”. He advices industry companies in Strategy & Organization.


Technology, partners, business model – the success of the net-worked car depends on the position car makers are able to take over in these three factors.

Success Factors for the Networked Car

Connected Car


Mark Heinrich is Partner and advises companies from the automotive industry on subjects of Strategy and Innovation.

Can it also access Facebook?” Consumers do not want to do without their smartphones, mobile Internet, and apps even when they are driving in their cars – networked services and an easy-to-use infotainment system are increasingly decisive elements when buyers make their decision. Successful car manufacturers look to end-to-end differentiation strategies which, for the first time, realize a direct channel to the customer in the driver’s seat. Above all, connected cars give extra thrust to customer relationship management and support uniform customer experience management right into the vehicle via the sales and service organizations.

What are the factors which determine how successfully OEMs exploit the new market opportunities?

The technology factor: Car makers today must decide how they want to incorporate their vehicles into networks and what functions they concretely want to offer to the customers in their cars. This is a tremendous challenge, because in introdu-cing this connectivity, automobile manufacturers are entering territory where their knowledge is limited and highly specific. The question arises as to how connectivity modules can be in-tegrated so that the vehicle status data collected as part of the on-board diagnosis can be made available for intelligent custo-mer communication such as the current supplies of spare parts. Going in the other direction, multistreaming services should, for instance, notify the driver about services appropriate to his driving style as it has been measured.

Connectivity is inevitably tied to questions about broadband capacity. The ever rising demand for mobile services mandates complex infrastructure investments. Should car makers go to the trouble to offer hardware-based infotainment options at all? Would it not be simpler to draw all of the services from a cloud? The will of the customers will certainly play a decisive role in this issue. The manner in which data are collected and, for example, processed in a cloud could – if poorly executed – jeopardize the operating safety of the car and consequently the automobile manufacturer’s image.

The partner factor: If they are to fulfill the rising technological requirements and customer wishes, manufacturers must open their automotive ecosystems to partners. New and established market players from the electronics, telecommunications, and software industries and other service providers, including trans-port companies and tourism and leisure-time organizers, will take part in the value creation in the future. Collaboration, cloud services, and architecture management are therefore con-

„ tinuing to grow in importance. The obstacles to coordination are clearly manifested (just one example) by the fact that the automotive industry still measures the life cycle of its products in years while the software sector frequently renews its services after only a few months or, sometimes, mere weeks.

Clearly: networking is much more than just a new feature for processes and systems. Car makers must develop completely new cooperation models and processes as well as models for product data exchange and partner networks.

The business model factor: The most important step here is the analysis of the product, its added value, and the related process and realization costs. Networked infotainment systems are more than just an attractive sales argument; they provide added value information which car makers can use to segment their customers more precisely, to develop services subject to charge, and to improve quality assurance. Sensors for diagnoses and navigational support deliver precise data about drivers, their driving habits, and the condition of their vehicles. If, using sensor data, a manufacturer determines that a part subject to wear requires maintenance, it can offer a simple service center visit at the nearest authorized partner to the driver. Further added value services could be digital driving trainers, competi-tions with community friends on the pertinent social networks, informative tips about the oil or coolant in use, or retrofitting services and podcasts for the car’s on-board computer.

However, business structures for profit margins and distribution must be analyzed for all of these ideas. Moreover, an eye must be kept on consumers: when considering costs, users are more and more frequently oriented to price structures which are familiar to them from their mobile devices and the telco markets. For instance, in this segment the flat rate is more popular than ad-ditional options at a higher price, the common approach in the vehicle configurator. Last, but not least: the broad masses will not accept connectivity unless the legally required data protec-tion is guaranteed.


Digital transformation is leading to substantial changes in the business models of many industries, and the energy industry is no exception. One successful approach for meeting the resultant challenges is the formation of new partnerships revolving around value creation networks: the smart business networks.

any industries have been experiencing significant changes from the digital transformation for quite some time. Telecom-munications, media, and retail enterprises were the first to feel the pressure from innovations introduced by Internet compa-nies such as Skype, Google, and Amazon. The pace at which the new business models are spreading into other industries such as banking and insurance, tourism, automotive, and the energy industry, is accelerating. One fundamental element of these changes is the evolution of value creation from simple linear chains towards complex value networks. This inevitably leads to a blurring of boundaries between industries. New, dynamic connections are being established among companies which previously operated in completely separate sectors. These

M

Good Connections

Smart Business Networks Offer New Opportunities to Utilities

so-called smart business networks (SBNs) rely on “smart” tech-nologies to link business capabilities of each participating firm.

As an example, we can look at the nascent market for intelligent home solutions (commonly designated by the terms “smart” or “connected home”): companies from previously clearly separte industries such as energy, consumer electronics, building auto-mation systems, and telecommunications are reaching out to one another and establishing partnerships. Similarly, car makers or automotive suppliers are working together with energy provi-ders and telecommunications companies to jointly launch pro-ducts and solutions in the new business field of electro-mobility (e-mobility).


Business model adaptation – the prerequisite for success

Success on these new markets can only be achieved with joint value creation of cooperations within a complex network. For this, all of the participants will need to modify their existing business models. Will we see energy utilities offering a subsi-dized car as a special incentive to sign up for their services much like telecommunications companies today give away cell phones when people sign a contract? Will automobile manufacturers offer electricity contracts as part of their maintenance package? Or will new service providers put together packages comprising vehicle, energy, parking space, and maintenance? All of these scenarios have one element in common: products and services from sectors which are unrelated today are being offered as a bundled package from a network of partners.

There are other markets relevant for utilities where we can ex-pect similar constellations: cities or regions with intelligent in-frastructures (“smart cities”); facility and energy management; or the built-up of decentralized infrastructures including uti-lity and communication networks, and local power generation (from combined heat and power plants, for instance).

Three roles in smart business networks

Various studies and analyses have revealed to us that companies which are part of smart business networks frequently play one of three fundamental roles: the operator of the basic infrastructure; the orchestrator which provides a platform; that the third group of companies use to establish close customer relationships and provide exciting innovations for the network’s customers.

The role of the infrastructure operator: Infrastructure providers (infrastructure as a service, IaaS) operate basic services, typically with little differentiation (“commodities”) for the other players in the network. We put energy, communications, and IT infra-structures in this category. Business models in the infrastructure sector frequently require large amounts of capital, are characte-rized by high efficiency standards and economies of scale, and demand a high level of skills in transactions and operations.

The role of platform provider: Platform providers play a key role in smart business networks. They make available business process artifacts which in turn enable other companies to as-semble end-to-end value creation processes with low upfront expenditures. Platform providers enable others to create a busi-


ness “out of the box” (also called “business as a service”, BaaS). Quite often, the platform provider becomes involved in the or-chestration of the value network, and it is frequently the domi-nant player in the network. It lays the groundwork which many smaller market players require for the operation of their business models. Familiar platform business models are found in the IT industry; the best-known example is Apple, whose App Store of-fers uncomplicated market access market for innumerable small software and game developers. A platform provider assumes re-sponsibility for the necessary standardization of interfaces and architectures. The design of the partner model must allow all players the flexibility to enter into other cooperative ventures or to conduct their own independent business activities.

The role of interface to the consumer: Most value creation chains and networks are focussed onto consumers. The satisfaction of their needs is – or should be – the ultimate objective of all production and delivery activities. As the level of technical com-

plexity in many products and services continues to increase, the “translation” of the technical product into the consumers’ world of needs and experiences (“consumer interface”) plays a decisive role for the competitiveness of the whole network. Compa-nies which excell at innovation, quality of service (“customer experience”), and brand management are especially successful in occupying the customer interface and managing customer relationships.

amazon: an example of “best practice”

If we now look at companies from different industries through the lens of the model sketched out above, we find that most of them can only meet the demands of one of these three roles satisfactorily and thus tend to focus on this business model. In most cases, this is absolutely the correct strategic decision. However, we can also see that there do exist a few compa-nies which succeed in filling two or even all three of the roles

Source: Detecon

• Physicalgoods• Digitalgoods (media, app store)• Devices(Kindle)

• Marketplace• Fulfillment• Billing/Payment

• Logistics• EC2/S3• Clouddrive

• Devices(smarthome,smartmeters)• Solutions/Applications• Services(forconsumers,prosumers and buildings)

• Fulfillment(fieldforce)• Marketplace(appstore)• Billing/Payment• Demand/Response,virtualpowerplants• Advisory,roll-out,andoperations

• Gasandelectricity• Distribution//Networks• Infrastructure/Gridmanagement• Generationandtrading

core capabilitiesBest practice

Amazon has expanded its business model from retail/consumer to infrastructure services by creating inter-faces, platforms, and wholesale business models.

Utilities 2020

Utilities can extend their current business areas by decomposing their value chain and establishing internal and external value networks.

InformationInnovation

Customer Service

InformationTrust (B2B)Partnerships

TransactionsEconomies of Scale

Financing

consumer Interface (Retail)

Business as a Service

Infrastructure


described above. As these companies are especially successful in their overall performance, an analysis of their formula for success can provide important insights for other enterprises.

Amazon is an excellent example for this type of behavior. The company, originally founded as an Internet book seller, has first become a provider of sales platforms and payment and logistics solutions (“business as a service”) and then developed into a global leader as an IT infrastructure provider. By offe-ring first platform and then infrastructure services Amazon has succeeded in significantly expanding its business model from that of a simple online shop for consumer products (“consumer interface”). Amazon has been offering platform services in the B2B sector by opening its shop platform for partners (“Market-place”) and including related services such as fulfillment and payment. Small sellers outsource the operation of their shop, their logistics and their payment processes to Amazon, and concentrate purley on sales/marketing, product selection, and procurement. They also benefit from the trust consumers have in the Amazon brand. With its division Amazon Web Services, Amazon has established itself as an infrastructure provider for cloud computing. The fundamental principle underlying this development is the strategic decision to make all of the services used internally (logistics, even the computer center infrastruc-ture) available to third parties.

Future roles for energy utilities

What can conclusions can be drawn from these insights and how does this reflect on the increasing complexity of value creation for utilities? Undoubtedly, energy providers will con-tinue to realize a substantial part of their revenues from their traditional infrastructure business and thus rely on their capital-intensive generation and network base. However, this business has already come under enormous cost and financing pressure.

As described in the examples at the beginning of this article, future growth potential can be found primarily in more complex business models based on partnerships. The role containing the greatest value potential is that of the platform provider which as the central player in the network offers “business as a service” propositions to other companies. By opening to the market their existing internal service elements, utilities have significant opportunities to become such central players in energy-related value creation networks . To succeed in this game, they will need

to develop new competencies. Besides the ability to manage partner and customer relationships, these will have to include capabilities to manage the information flow in those value net-works and the dedicated build-up and monetarization of brand trust.

To conclude we will illustrate this discussion in the context of smart cities. Driven by urbanization – by 2050, 70% of the world’s population will live in cities – city planners urgently require sustainable urban development concepts which assure the quality of life for city dwellers. Today companies such as IBM or Siemens dominate the discussions around smart cities. However, this area offers many opportunities for utility compa-nies to implement new business models. They can contribute their know-how in the areas of energy generation, energy ma-nagement, and energy efficiency and offer their management competencies to cities, citizens, and other service providers. Addressing areas ranging from intelligent energy provision to integrated transport systems, facility management and building technologies, health care, security, and education, energy utili-ties can establish position themselves as partners to citizens and communities.

Partnerships lead to success

Vertical disintegration – the break-up of the linear value chain through unbundling – has left the energy industry with the challenge of finding and establishing new value constellations. Smart business networks provide a model which leverages the digital transformation and can reveal new opportunities. With it utilities have the chance to intelligently expand their business model, create new markets, reach new customers and tap into new value pools by establishing partnerships with companies from other industries. The more actively energy utilities deve-lop this role for themselves, the greater their share of the value creation from the network can be.

Dr. Volker Rieger, Managing Partner, advises clients in the energy and telecommunications sectors, aiding them in the development of new business models in the context of the digital transformation.


DMR: Dr. von Lucke, how can citizens, administration, and compa-nies benefit from digitalization in the form of e-government?

Among its other functions, electronic government sets up electro-nic procedures and processes to serve as the infrastructural foun-dation of government and administrative activities. The utilization of digital distribution channels can reduce transaction costs. But this must not be restricted to horizontal multi-channel manage-ment of channels parallel to one another. Focus must be on the establishment of a common underlying digital infrastructure for the intelligent bundling of various distribution channels in com-plete alignment with the principles of vertical multi-channel ma-nagement. Once this is in place, personal counseling, call centers, or written correspondence can be positioned on the electronic channel. When the strategic approach of vertical multi-channel management has been understood and consistently implemented, sustainable savings will be possible for government agencies in the middle term.

DMR: So the key objective of e-government actions is to reduce costs and increase efficiency?

The true goal is the optimal performance of public services while simultaneously increasing efficiency. But cost-cutting measures are an important aspect. E-government will help us to circumvent the imminent challenges of demographic transformation. Duri-ng the next 10–15 years, about 40% of the workforce employed

How can information and communications technologies be utilized to mine the potential for modernization of the public sector? We spoke with Dr. Jörn von Lucke, professor and head of the Deutsche Telekom Institute for Connected Cities (TICC) at Zeppelin University in Friedrichshafen, about possible e-government applications in public administration.

E-Government Modernizes Public Administration at the National, State, andMunicipal Levels

Digitalization on the Advance

in public administration will be headed for retirement, but the increased burdens for the payment of their pensions will leave al-most no financial opportunities for new hirings. Obviously even retired civil servants must continue to receive their salaries. The situation demands that we start to think now about the transfer of knowledge to future generations. E-government can offer us the knowledge and archiving formats which will be needed.

DMR: To what extent can additional public revenues be generated by e-government, and is this politically even desirable?

Regulations and fee schedules certainly provide opportunities to define new revenue models during times of low income. But is there any reasonable point to this if the provision of open data free of charge to new entrepreneurs generates new economic growth? Just as an example, I would like to mention the provision of open geodata within the sense of the “open data” approach. Levying fees acts as a barrier to the utilization and recycling of data. A return to indirect tax financing by waiving any fees would sustain-ably increase demand for geodata, but it would also turn the pre-sent business model of the surveying authorities completely on its head. Young business people use these data and develop apps they sell on the market, creating jobs and paying income and value-added tax. EU Commissioner Nelly Kroes expects a growth spurt of €40 billion from open administrative data. Starting from these basic assumptions, we must give careful consideration to the con-sequences “open data” will have for business models such as those


which surveying authorities have successfully followed for so long. So there are major areas requiring action within the context of e-government and open government where we must think long and hard about new business models.

DMR: One could get the impression that administrative costs must be borne largely by citizens, whether directly or indirectly.

There can be no doubt that citizens and businesses will have to contribute to defraying the costs of administrative services. Still, we must ask ourselves why the fee schedules should continue to be aligned to personal counseling, the most expensive distribution channel, when the electronic variation would be significantly less expensive for everyone involved. I believe that personal interac-tion will continue to be important; among other reasons, we do not under any circumstances want a digital gap to appear. Never-theless, fees could be assessed differently and at lower rates if based on vertical multi-channel management.

DMR: How will turning away from personal interaction and moving in the direction of greater digitalization impact the quality of performance of public services?

There are areas in which personal interaction is absolutely indis-pensable: the integration of workers seeking employment or the support of people in genuine problem situations, for instance. These are areas in which services must be perceived as a public

duty and where a direct relationship to the “citizen” is essential. Of course IT technologies can be used to support care of the aged and the ill. But there are also many classic administrative proce-dures which consist primarily of the processing of information and which could be conducted electronically. I am convinced that IT technologies can ease the workload on staffs and support them in the performance of their duties and responsibilities, which can only be of benefit for them. The decisive point is that people must be able to depend on IT.

DMR: What major fields of action should be at the focus of public administration within the framework of e-government?

At the state and municipal level, IT-supported bundling and pro-cessing of tasks and services in the form of service centers (shared service centers) will play a vital role in the future. The impro-vement and enhancement of inter-community cooperation can lower costs and open up new structural opportunities if a number of administrative units share the same infrastructure. Open Bud-get 2.0, the transparent use of our tax money by the public admi-nistration, will be another important topic.


Detecon, in cooperation with the Federal Ministry of Economics and Technology, honors extraordinary performance and products from companies in the sector of in-formation and communications technology. The ICT Award is presented in the ca-tegories “Innovation”, “Performance”, and “Incentive Award”. The first-ever award ceremony was held during the opening festivities for the new Detecon headquarters in Cologne. An independent jury had selected the winners from among 24 nominees in a secret vote. The second ICT Award will be presented on 26 September 2013.

The jury members: Hansjörg Baur (T-Venture), Dr. Andreas Bereczky (ZDF), Prof. Dr. Peter Buxmann (TU Darmstadt), Dr. Bettina Horster (VIVAI Software AG), Thomas Lünendonk (Lünendonk GmbH), Dr. Pero Micic (FutureManage-mentGroup), Prof. Dr. Arnold Picot (LMU München), Prof. Dr. Radu Popescu- Zeletin (Fraunhofer-Institut FOKUS), Daniel Schleidt (F.A.Z.-Institut), Dr. Christian Schmidt (DLR), Andreas G. Scholz (Freier Journalist), Rudolf Schulze (VDI-Nachrichten), Harald Stöber (Vodafone D2 GmbH), Dr. Alexander Tettenborn (BMWi), Heinrich Vaske (Computerwoche), Prof. Dr.-Ing. habil. Anette Weisbecker (Fraunhofer-Institut IAO).

Detecon Announces ICT Award

In cooperation with


INNOVATION AWARD: testCloud.de GmbH, Berlin-Friedrichshain, provides innovative quality assurance by testing apps, Web sites, e-commerce platforms, or mobile applications using the crowd sourcing principle. Almost 3,000 registered users, ranging from IT specialists to normal hobby Internet users, put the software from start-ups as well as from DAX companies through its paces with regard to function, usability, and security. The results supplement classic test procedures because the user groups who are actually the target of the development test the applications.

PERFORMANCE AWARD: Transinsight GmbH from Dresden offers intelligent semantic search technologies which logically link search queries with background knowledge, substantially shortening the time and effort required for research on the Internet. Public Internet databases currently maintain thousands of 3-D protein structures, hundreds of thousands of sequences, and millions of academic and scientific documents. Medical, biotechnological, and pharmaceutical research will benefit especially from the simplified search, but it will also serve markets such as the energy, automotive, and financial sectors well.

INCENTIVE AWARD: the award for a start-up company using its own ICT developments goes to the Berlin company UPcload GmbH. This enterprise develops software for capturing body measurements by Web cam so that online shoppers can compare the measurements of the garments they are considering when using online shops. The technology will enable mail-order companies to reduce costs for returns of merchandise while users can check on their monitors, free of charge, whether and how well the item of clothing fits their own bodies.

The Award Winners:


“Information will be the key for the next 100+ years. We must ensure, right from the beginning, that the legal framework moves parallel to what is technically possible; ideally, it will be one step ahead. This is es-pecially true with respect to cloud compu-ting. As long as this awareness has not be-come solidly entrenched in everyone’s mind, security concepts which are invulnerable to spying – as of today, in any case – help to protect data. So-called homomorphic techniques or steganographic methods can be helpful in securing data in such a way that they are per se unreadable for unautho-rized parties. Along with our outstanding expertise in semantic technology, we at Transinsight also offer solutions which help our customers in the area of IT security. We are one of 12 selected projects in the BMWi program TrustedCloud working in GeneCloud specifically on high-security solutions for the development of medicines. This is literally a matter of billions and development times of up to 12 years for each medicine – data security is of enor-mous importance here. Small and midsize businesses in particular profit from our high-security bioinformatic cloud solutions, impacting among other projects the deve-lopment of medications to fight pancreatic cancer with a life-prolonging effect that has never before been achieved. What is good about this: owing to the extremely stringent requirements of the pharmaceutical indus-try, we have now developed solutions which help other industries as well to exchange and store data securely.”

Dr. Michael R. alversceO transinsight GmbH

“The events related to Prism and the spying activities of the NSA have quite properly led to a public outcry, but they make one thing clear above everything else: being able to handle data properly, whatever their nature, is becoming increasingly important. This is not only a question of data protection, which UPcload naturally takes very serious-ly because our users can save their personal body measurements in a profile. Sensitivity is essential in handling these data, and they must be protected from misuse. But above all, the current debate reveals how important digital data have become and what masses of relevant information can be mined from them. The handling of data will remain a constant subject in the coming years.”

asaf MosesceO UPcload

“Our testers frequently see prototypes and software when they are still in alpha or beta versions. That is why we take the subject of data security and confidentiality very seri-ously; it is the foundation of our business model. We often test Web sites, mobile apps, or even enterprise applications for compa-nies at a very early stage of development – generally before they become known to the general public. We have specific mecha-nisms such as non-disclosure agreements in place between us and the testers or between customers and testers so that so-called leaks can be prevented. If this does not appear to be adequate, we can provide VIP testers who have special security qualifications. Whether an online shop or corporate soft-ware, our general principle stays the same: there is no reason not to agree to a review. A check can be implemented internally, but an independent service provider should be called in as well, just like taking your car to inspection. In the course of our security checks, we look for errors so that we protect companies and make them less vulnerable to attack.”

Thomas GrüderichcSO testcloud

Debates on the comprehensive, worldwide surveillance of communications

and data manipulation have brought the topic of information security right

back to the forefront. What our winners have to say about it:


Interview with Professor Bernd Benninghoff, UAS Mainz School of Design

„How Does a Space Communicate?”


resonate is a light and sound installation. It consists of several kilometers of resonating strings and eight interaction bodies containing a total of 1600 controllable LEDs. When you pluck the strings, the tension and vibration of the cords change. Visitors can play the strings to generate individual sounds which are translated visually into light waves. The surface of the objects is the interface between sound and light. During the Luminale 2012, resonate was exhibited inside a container boat in Frankfurt am Main, from where it moved to the ZKM [Center for Art and Media Technology] in Karlsruhe, one of the most impor-tant sites for contemporary media art. resonate was the winner of the gold medal during the in-ternational design competition Commaward in the category Space in 2012, and this year it won the “Golden Nail”, first prize of the ADC competition in the category Young Artists/Spatial Realization.

DMR: What is meant by the term “spatial communication” and what function is interior architecture expected to play here?

B. Benninghoff: The scope of activities performed by interior architects has expanded tremendously in recent years and has become extraordinarily complex. Besides the classic range of activities for interior design, interior architecture today moves within an interdisciplinary field of work encompassing architec-ture as well as product and communications design. Creating an atmosphere through light, color, and materiality in conjunction with the design of spatial structures has always been a part of the core competencies – the scenographic element, the production of spatial atmosphere and communication between a space and its users, is becoming more and more important.

Aspects of spatial communication are at the focus of the master’s study program directed by Professor Benninghoff at the UAS Mainz School of Design. Interaction and integration of ICT play an essential role in the projects. The professor spoke to DMR about his research work.

Professor Bernd Benninghoff is the director of the master’s study program in interior architecture “Communication in Space” at the University of Applied Sciences Mainz School of Design. From his perspective as both professor for furniture and interior design and freelance designer, he sees the product and its surrounding space in a reciprocal relationship which must be considered holistically during the design process. The university projects he has initiated are characterized by their interdiscipli-nary orientation and the collaboration with external cooperation partners from industry and professional trades.


This prompted us to establish the master’s study program “Com-munication in Space” at the UAS Mainz School of Design three years ago. Since that time, we have been engaged in an intense examination of the opportunities of communicative and inter-active space and product design. As part of the Cologne Passa-gen in 2011, for instance, we refurbished the basement bar of a traditional Cologne hotel, turning it into an atmospherically charged interaction space in which visitors could, by their joint actions, affect the lighting atmosphere.

DMR: Digital media change spaces as well as the behavior of the people in the spaces. What demands does this make on interior ar-chitecture, and what future developments are even now becoming apparent?

B. Benninghoff: In this age of digitalization, the study of new media and their significance for interior design is becoming an important aspect of design. Rooms of the future will be able to respond more interactively to the needs of their users. The features we currently find primarily in the fields of exhibition design and trade fair architecture will gradually begin to appear in private and public spaces as well. The users’ sense of well-being will turn decisively around the degree to which the technology which is employed runs unobtrusively in the background and can be operated intuitively in a user-friendly environment.


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DMR: What form do designing and planning processes take in the digital age?

B. Benninghoff: Obviously today’s designers have an array of tools at their disposal which differ tremendously from what we had just ten years ago. Powerful software programs now enable the generation and visualization of extremely complex, para-metric spatial structures. There has been enormous progress in the area of model construction as well – digital rooms and pro-ducts can be transformed directly into physical models with the aid of computer-controlled milling machines, lasers, and 3-D printers. However, all of this technology is nothing more than a supporting tool and ultimately is only as good as the people operating and using it. So imaginative concepts frequently re-sult from people reaching for pencil and paper, just as in the past, rather than their computers during the initial phase.

DMR: Tell us what comes to your mind when you imagine an “atmospheric office world”. Can design itself be the communications solution?

B. Benninghoff: The design of the rooms is certainly not a panacea for a healthy, communicative working atmosphere – but well-planned spaces can support a positive working atmo-sphere and enhance the interaction among the associates. This is no simple matter because the means of individual, electronic networking possible today create a strong temptation to restrict communications to e-mails, text messages, or smartphone con-versations. The technical opportunities of a home office are simultaneously a blessing and a curse.

Assuring active communication in an office is dependent on the work procedures established within the company. They must be defined in such a way that they encourage teamwork and communication among associates. If consciously designed spa-tial planning and atmosphere support this strategy, associates will recognize and appreciate once again the quality of personal encounters.

DMR: Your study program is dominated by group work, most of it interdisciplinary. Is this where we find the key to innovation?

B. Benninghoff: In the future, it will be more important than ever for people to be transdisciplinary in their work. While com-petence in your own field will remain essential, looking outside of its boundaries into the neighboring work areas is of great im-portance. That is why we are trying to encourage interdisciplina-ry ways of thinking before our students ever leave school. Many of our projects are conducted in collaboration with related busi-ness divisions or in cooperation with industrial enterprises. One fantastic example of this is the project “resonate”, which we de-veloped jointly with the Mainz School of Music. The intense, experimental debate with another discipline and the linking of competence in diverse fields were what ultimately endowed the installation with its persuasive depth and innovation.

DMR: Many of your projects, especially “resonate”, display the grace of art and performance. Is there nevertheless always a connection to actual daily practice, or are you more concerned in these cases with the experimental character?

B. Benninghoff: The university environment offers to us and our partners the opportunity to approach new topics in spatial com-munication from the perspective of experiment and research. But during our work with our students, we never lose sight of our major aim: the development of an independent, robust, conceptual approach. When you are in a position to put aside for the moment the commercial and technical constraints of a realization, you will often come up with surprisingly innovative ideas. However, we are not content to create intellectual pipe dreams and leave it at that. This is our motivation for realizing as many of the university projects as possible – most of them in close cooperation with industrial partners and sponsors. You cannot determine how successful a concept truly is and what difficulties it entails until you begin to realize the ideas. This is often an exhausting, although extremely instructive, process for everyone involved.


DMR: Are there ideas to utilize your design elements in places where interaction is necessary, but almost never occurs in the re-quired scope for many different reasons – for instance, in nursing care?

B. Benninghoff: During the course of our master’s program, we certainly take on public and social issues, some of which are de-finitely disturbing. Once of last year’s projects revolved around the subject of death. How do spaces and products deal with this taboo subject? What design possibilities are there?

We have planned a project for the design of meditation rooms at Frankfurt Airport in cooperation with the Fraport in Frankfurt for the coming winter semester. How can rooms be designed for various faiths? What features must be incorporated into a room which serves different religions? How does this room communi-cate – without using religious symbols?

DMR: How does your work give due regard to the subject of envi-ronmental sustainability?

B. Benninghoff: No designer who has any sense of accountabi-lity can ignore the subject of environmental sustainability today. Our curriculum includes instilling in our students an aware-ness for the use of long-lasting materials, designs, and design concepts. This is not a simple issue, especially in our business, because giving due regard to sustainability is a thorny matter when you are planning temporary exhibitions, installations, or trade fair appearances. It is not easy to convince customers of the value of a long-term exhibition concept because they always want to show something new to the outside world. Anyone who has ever glanced into the large waste containers after the conclu-sion of a trade fair will know what I am talking about. We must awaken a sense of awareness in the companies and offer them concepts which make long-term spatial utilization possible – without being repetitive. New media and technologies which can fill long-lasting spatial structures with constantly changing content are an intelligent approach.

DMR: Do you have such a thing as a pet project?

B. Benninghoff: No – not really. It may sound like a cliché, but it’s true: the next project is genuinely always the most exci-ting one and always confronts us with new challenges. We are delighted that the success of our past installations has in the meantime attracted the attention of third-party companies and museums to our study program. They have subsequently ap-proached us with new subjects which we can realize in the form of cooperation projects.

DMR: What projects can we look forward to in the near future?

B. Benninghoff: Since our previous master projects have pri-marily examined communications and interaction of spaces and their users, we will be focusing more intently on the ob-ject and its possibilities for communication in this semester. We will ask ourselves: What situations in life cry out for interactive products? What objects gain genuine value from a conscious-ly interactive design or the sensible integration of information technology? We will be looking this time for objects somewhere between the opposing poles of furnishings and space which make contact with users, prompt them to engage in communi-cation, address the senses, yet operate as simply and intuitively as possible. Right now, a group of 18 students is in the middle of the concept and development phase – in a joint effort with a group of project partners from industry and professional trades. I am sure the results, which will be presented in September, will be of interest to you.


Success in the Digital Age

What CEOs Think About the Potential in Information and Communications Technology

Data are today the key to corporate success in various industries and business models. This is a situation which requires focusing

attention on customers.

nyone who has had anything to do with the innovative use of information and communications technology in companies over the last thirty years can tell you plenty about the difficulties of talking about the subject at the management level. As a rule, the topic does not appear on the agenda unless there has been a business disaster – e.g., the collapse of the e-business sector – or projects have gone completely south.

But we have recently noticed that more and more top managers, CEOs above all, are spending more time examining the use of information and communications technologies. These circumstances have prompted Rupert Stadler, CEO at Audi AG, and two professors at the University of St. Gallen – Andreas Herrmann and me – to invite thirteen CEOs and members of the management boards at large German stock corporations along with two other professors to write contributions describing their handling of the innovative potential found in information and communications technology for publication in a kind of anthology. I would like to summarize some of the key state-ments below.

The view of the ceOs: customer contact is the top priority

All of the corporate leaders we spoke to are in agreement: information and communications technology is permanently changing products and processes. The communication behavior of the customers enjoys the top priority for the use of new technologies. Every single one of the top managers who has something to say in the book argues in the same direction. Rupert Stadler, for instance, writes that customers will in the future expect that their professional and private lives, both on four wheels and away from the vehicles, will be mapped with the aid of “seamless connectivity” and supported by a combina-tion of “always on” and “data in the cloud.”1 René Obermann, CEO at Deutsche Telekom AG, explains how the social media are giving rise to a new “customer power”. Online

A purchase recommendations, service and product reviews are playing an increasingly important role.2 Michael Frenzel, Super-visory Board chairperson at TUI Travel PLC, describes in his contribution how social media have unalterably changed custo-mer relationships and business models in the tourism industry.3 Herbert Hainer, CEO at adidas AG, goes so far as to talk about a revolution in communications which has been triggered by the new digital media. Johannes Teysenn, CEO at E.ON AG, describes how the Internet has become a major driver of com-petitive dynamics on the energy market.4 Mathias Döpfner, CEO at Axel Springer AG, seeing the profound changes in his industry, emphasizes that media companies must find a way to establish themselves as pioneers and specialists for customer loyalty and orientation on digital channels, similar to their accomplishments in print business over a period of decades.5 Surprisingly, the CEOs arguing in this direction did not always come from companies which are primarily active in the business-to-consumer sector. Even top managers from the business-to-business sphere are aware of the power of the new

1 Cf. Stadler, R.: Kunden- und Produktbeziehungen für individuelle Mobilität der Zukunft, in: Stadler, Brenner, W., Herrmann, A., Erfolg im digitalen Zeitalter, FAZ-Verlag, Frankfurt am Main 2012, p. 64

2 Cf. Obermann, R.: “Like” or “Fail”? – Kundenbeziehungen mit der Generation Facebook, in: Stadler, Brenner, W., Herrmann, A., Erfolg im digitalen Zeitalter, FAZ-Verlag, Frankfurt am Main 2012, p. 88

3 Frenzel, M.: Wie die Touristik die neuen sozialen Netzwerke nutzen kann, in: Stadler, Brenner, W., Herrmann, A., Erfolg im digitalen Zeitalter, FAZ-Verlag, Frankfurt am Main 2012, pp. 151 et seqq.

4 Teyssen, J.: Intelligent vernetzt im Haus der Zukunft – Der Umbau des Ener-giesystems verändert die Rolle der Verbraucher und der Kunden grundlegend, in: Stadler, Brenner, W., Herrmann, A., Erfolg im digitalen Zeitalter, FAZ-Verlag, Frankfurt am Main 2012, p. 110

5 Döpfner, M.: Leser- und Kundenorientierung in einer digitalisierten Medien-welt – Eine Zwischenbilanz, in: Stadler, Brenner, W., Herrmann, A., Erfolg im digitalen Zeitalter, FAZ-Verlag, Frankfurt am Main 2012, pp. 167 et seqq.



developments in information and communications technology to revamp structures. Rolf Buch, former CEO at Arvato AG, expresses succinctly what many of his colleagues are thinking: “Amazon has demonstrated how a firm can address new, flexible, but demanding customers, listen to them, and structure its tech-nologies in alignment with their needs.”6 Heinrich Hiesinger, CEO at ThyssenKrupp AG, writes in his contribution of an “objectivization” of customer relationships as a consequence of the employment of modern information and communications technology.7

Summed up, the common thread of all of the articles: modern information and communications technology is profoundly changing the relationships to customers – making it an issue for the executive suites.

Data – the “oil” of the 21st century

The contributing CEOs describe numerous fields of informa-tion and communications technology which will impact the interface to the customers. The range of technologies mentioned by the CEOs stretches from cloud computing to new user interfaces and social media to information and communica-tions technology in products. Most of the CEOs point out that the use of the data will be of decisive significance. The figure depicts a model based on these ideas of management in the digital, networked world in terms of “Company”, “Customer”, and “Products and Services”. Data exist in companies (product data, for example) as they do for customers (e.g., related to Internet orders), and in the embedded systems8, in products

and services (for instance, wear or maintenance intervals). There is even interesting information “between” the data such as the purchase preferences of customers or the use of products or services. The environment is integrated into the model as well because environmental data such as the geographic location or weather information are included in many information systems.

The model reveals that the “traditional” concept of data must be expanded. In the future, company data will be understood as more than simply the data records stored in structured databases, including customer databases or CRM systems in the SAP system. They will also encompass unstructured data such as videos or content from social media within and outside of the company as well as data generated by the embedded systems in products. Huge amounts of data are created within and out-side of the company at the interfaces between customers, their products and services, and the company itself. The systema-tic evaluation of these data – data analytics – can lead to new findings about customers’ behavior. Companies such as Google, Amazon, eBay, or Apple are demonstrating just how far data-oriented business models can go. Customer behavior has been tracked for many years in these companies and all of the data have been stored. They can be used as the foundation for high-ly precise predictions about customers’ behavior. Anyone who has ever “given in” to a purchase recommendation at Amazon is aware of just how exactly Amazon knows the reading and infor-mation needs of every individual and converts them into sales. A trend to so-called “real-time processing” in the use of the data is discernible. More and more data are being stored in such a way that they can be retrieved with virtually no delays. Know-ing about the data relevant for a company, their collection, the determination of their quality, and, finally, their use when making decisions will develop into a key element of corporate management in many different areas and at various hierarchical levels. Marketing directors in consumer goods companies will be the first executives who must actively cultivate their data. Customer contact is handled on many channels today. Each of these channels generates data which allow the drawing of conclusions about obvious or latent customer needs or which provide clues as to why a customer has or has not bought a certain product or service.

When you read all of the articles from the CEOs, you could have the impression that data or information will in the future be a resource with the same fundamental importance as labor

6 Buch, R.: Der zersplitterte Markt – Dienstleistungen im Zeichen der Digitali-sierung, in: Stadler, Brenner, W., Herrmann, A., Erfolg im digitalen Zeitalter, FAZ-Verlag, Frankfurt am Main 2012, p. 210

7 Hiesinger, H.: Die Märkte der Zukunft erschließen – Wie die modernen Infor-mations- und Kommunikationstechnologien das B2B-Geschäft verändern, in: Stadler, Brenner, W., Herrmann, A., Erfolg im digitalen Zeitalter, FAZ-Verlag, Frankfurt am Main 2012, p. 252

8 The term “embedded systems” describes systems which have been integrated into physical products and make it possible to monitor, even control the products. Examples can be found both in the equipment of production lines and in objects we use every day.


and capital. Although this is by no means a new proposition, the latest developments – social media, Industry 4.0, the Internet of things – make it crystal-clear that this formerly bold proposition has in the meantime become corporate reality.

consequences for corporate management

The growing awareness among CEOs for the future significance of information and communications technology, above all of the data, is the first step toward the development of a “digital strategy” in a company. Discussions at the management level reveal that it is never long at all before critical questions are asked: “Do we have an overview of the data about our customers which are available in the various sales and communi-cations channels?” “Do we know when and why our customers utilize the various sales channels?” “Do we have sufficient know-ledge of our customers’ preferences?” It is the responsibility of top managers to ask the right questions and to interpret the answers correctly. The IT department and other business units have the job of providing the data in the quality necessary for a valid assessment. We repeatedly see that there is a lack of

clarity in companies concerning who is responsible for what tasks in the area of data. Often the task is simply delegated to the data processing department without giving it much thought. While this decision may appear logical at first glance, it is inadequate for the complexity of a future-oriented implemen-tation of information and communications technology. If, for example, products are supplemented or expanded by electronic services, the data processing department in most companies today is out of its depth. For instance, in an automobile company there must be clarification of the question as to whether the data proces-sing department or research and development is responsible for a development which enables a car to be unlocked using an app on a smartphone instead of a key. The responsibilities for innovation must be newly assigned in many industries because more and more innovations are software innovations. The consequence: decisions regarding meaningful and useful innovations are impossible without knowledge of the software creation process and the challenge in the operation of soft-ware. Before long, this seemingly “trivial” issue branches out to demand answers to many more questions. What qualifications are required for managers? What organizational unit is

Source: Brenner, W., Herrmann, A., Das Modell des Managements in der digitalen vernetzten Welt, in: Stadler, Brenner, W., Herrmann, A., Erfolg im digitalen Zeit alter, FAZ-Verlag, Frankfurt am Main 2012, S. 20

Model of Management in the networked World


responsible for this type of innovations? Which of the members of top management holds the “strings” in his or her hand? Every company must find answers to these questions which are specific to its situation. Answering them presumes a prior intensive learning, discussion, and transformation process. Progressive companies have already initiated this process.

end of the development is not foreseeable

We repeatedly hear putative experts making this statement: “Social media and mobile processing are the final quantum leap in information and communications technology. The frenzied development will soon calm down.” There are absolutely no indications at this time that statements of this nature might have a grain of truth. On the contrary, the pace of innovation is more likely to accelerate. There has been no interruption in the flow of enormous amounts of capital into new ventures based on digital business ideas, and the positive mood in Silicon Valley continues unabated. There is also clear evidence that consumers, no matter what their age, are integrating the mobile Internet more and more tightly into their everyday lives. Many people – and not just the younger generation – use the Internet, the world of apps, and smartphones are used without a second thought. Companies which fail to adapt their busi-ness model, processes, and structures to this new age will be confronted with daunting problems. The CEOs and researchers who have contributed to our book describe the form that a constructive and future-oriented analysis of information and communications technology could take.

Dr. Walter Brenner is professor for business

informatics at the University of St. Gallen

and executive director of the Institute for

Business Informatics. He previously held

professorial positions at the University of

Essen and the TU Berkakademie Freiburg.

His research activities focus on the industriali-

zation of information management, manage-

ment of IT service providers, customer

relationship management, the utilization

of new technologies, and design thinking.

Moreover, he is a freelance consultant for

information management questions and the

preparation of companies for the digital, net-

worked world. In collaboration with Rupert

Stadler and Andreas Herrmann, he published

the book “Erfolg im digitalen Zeitalter:

Strategien von 17 Spitzenmanagern” (Success

in the Digital Age: Strategies of 17 CEOs and

Top Managers) in October 2012.


You could almost have the

impression that the stiff wind of

revolution on the Internet has

dropped into a gentle breeze.

The new position of strength

enjoyed by customers has long

since been known. The recipes

for success proclaimed for busi-

nesses place a company’s own

Facebook and Twitter accounts

and an attractive Web site at the

top of the list. But does that really

suffice? Success in the Digital

Age collects for the first time the

success stories and experience

reports from 17 CEOs and top

managers from a broad range

of diverse industries and from

leading academics.

* Availalbe only in German

Success in the Digital Age: Strategies of 17 CEOs and Top Managers * Rupert Stadler, Walter Brenner, Andreas Herrmann

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Social CRM

From Digital Communication to Social Customer Excellence


MVNO giffgaff handles 99% of the customer service through the community and needs a total of

25 associates in the entire company!Source: Lithium Case Study,

http://www.lithium.com/customer-stories/giffgaff

McDonald‘s leaves the development of burgers up to customers and generates the highest campaign revenues ever realized in Germany!Source: Agency Razorfish, http://www.razorfish.de/projects/mcd_mein_burger


Although many companies are active on social platforms, their attitudes toward this medium remain highly reserved. The determined evolution

of social CRM is far from being the rule. Yet they now have a golden opportunity to set themselves apart from the competition.

n encouraging figure is the 88.7% of companies surveyed for a BVWD (Bundesverband Digitale Wirtschaft) study last year which responded that they maintained a profile on social networks (“Einsatz und Nutzung von Social Media in Unternehmen”, Carola Lopez, 2012). This result is witness to a fundamentally high level of acceptance of the medium today. However, the possibilities offered by social media for customer communications and CRM go far beyond a few postings on a Facebook page.

More than just another channel

Regarding social media as just another communications channel connected along with other channels to the service center or the marketing agency falls far short of their true significance – and is even a source of substantial risks. Observers frequently notice that representatives of various corporate units – e.g., recruiting by HR, campaigns from marketing, and a customer service pro-gram from the service center – are modeled as “island solutions” on a number of social media platforms. At times these solutions do not even maintain consistency in the corporate representati-on. In this type of setup, the cross-channel capability to act ex-pected by users such as the answering of service questions on the company’s Facebook page and a fast response cannot be realized. Not to think of the analysis of the data and their translation into concrete actions.

The step from social media management to social CRM requires as the very first step a uniform image of the medium itself and a target picture tailored to the company’s own social media activities. The specifics described below are especially important.

• Social media are distinctly different from proprietary channels. There is a broad range of potentially relevant plat-forms, and their specific impact varies over time. This is accom-panied by a parallel change in the target or customer groups represented on each of the platforms.

• SocialmediaandsocialCRMarealwaysa formofmany-to-many communication. The corporate representatives inter-act in direct dialog with users, who expect great transparency as well as high speed of response and adaptation. The perfor-

A mance, whether good or poor, is duly noted by the particular customers, but is not limited to this group. A broader public perceives events, assesses them, and comments on them.

• This transparency and the fact that users cannot unambi-guously be identified as customers – nor authenticated – also limit the offering of business transactions which can directly be performed on social media platforms. The design of a sensible, simple transitions into more discrete channels are an important efficiency factor in this context.

• Socialmediaasachannelofferthechanceofsteadilyexpan-ding reach, above all the participation of external multiplicators and related cost advantages in communications. The price is the limited ability to control what happens and the pertinent need for maintaining an overall view and the ability to intervene. Besides cost advantages, however, there is improvement in the credibility of the transported information (see also the study results from “How Do Social Recommendations Influence Shopping Behavior? A Field Experiment”, Grahl/ Rotlauf/Hinz, Working Paper, April 2013).

Multitude of opportunities of great reach

Social media, being a channel with special characteristics and extremely high adaptation speed, influence all areas of CRM: sales, service, and marketing. The company can use social media to shape the relationship to its customers much more actively, increasing turnover and strengthening customer loyalty. The insights gained from social media become useful as a means of understanding customers better as well as to offer customers more efficient support and to increase their loyalty. When pro-ducts, services, and brands are tangibly experienced, the result is a positive influence on the decisions to buy and on access to new revenue potentials. There are even some industries for which social media are the very first chance to develop direct, qualified customer contact in a major scope.

In the automotive industry, for instance, direct customer contact has principally been the realm of the dealers. But now, using social media, manufacturers are themselves investing in com-municating with their customers with respect to products and


service and are initiating directed activities to secure customer loyalty and raise brand awareness. In 2010, MINI developed a social game melting the online and offline worlds into each other for the launch of the MINI Countryman in Sweden. The users of the iPhone app see a virtual MINI in Stockholm. If they approach the car, they can “steal” the virtual vehicle. The person in possession of the virtual MINI at the end of the week wins a real model.

Industries with intense direct customer contact such as telecom-munications also find that social media are not simply supple-ments to the previous channels, but can improve the channel efficiency and customer experience across all channels in online and offline cooperation. For example, in-bound service contacts can be reduced by predictive servicing. Comments about the company in social media (share of buzz) are analyzed so that relevant service subjects can be discerned. The findings are cou-pled with an analysis of the captured reasons for calling from the call center. Active communications related to the identified subjects are distributed in the channels, and any customers who are affected can be contacted directly. Companies can use this method to alert customers proactively in the event of a widespread service disruption, for example, possibly even before they become aware of it. A move of this nature heads off dissa-tisfaction and conveys the message, quickly and to the specific

targets: “Problem has been detected and is being remedied!” Companies score points through transparent communications and the convincing presentation of competence.

Simultaneously, customers can also utilize mechanisms in social media and actively shape the relationship to companies. The abundance of possibilities ranges from the participation in a community revolving around a certain product to networking and sharing with other customers, from the online rating of a company’s performance to the design of product features. In acting this way, companies surrender quite a bit of their com-mand over information policies to customers, but the latter reward participation and co-determination – in the best cases, by displaying a positive message to thousands of followers. The challenge on the path to social customer excellence is learning to coordinate and control these many different possibilities and to secure a consistent customer experience.

Roadmap to Social customer excellence

Drawing on our experience, we recommend an evolutionary approach for the establishment and expansion of social CRM capacities, one which gives due regard to the special challenges presented by social media. We group the activities into three phases: Listen, Talk, Co-create.

Source: Detecon

Other areas: R&D, PLM, HR, IR

Legend:= Reactive= Active and reactive

Other channels:E-mail, text messages, infomail, call, shops, mobile sales, tech. field reps

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atIO

n

Create a tangible experience with products and brand(s

Positively influence on buying decisions / Develop

new sales potential

Make insights usable across all channels

Help customers efficiently and reinforce loyalty

Understand customers better


Joachim Hauk is Managing Consultant and advises companies from various industries on the topic group related to CRM, sales, and service. His special focus is on issues of channel management, customer experience management, and customer loyalty.

„Listen“ The company initially plays a passive, observing role. It follows the activities of its customers on the various social media platforms and identifies focal points of activity and reach as well as topical hot spots. The required analytical capacities are built up and refined. Knowledge obtained from customer feedback, however, flows into the improvement of the processes, e.g., into service and sales. Risks to reputation can also be recognized at an early stage. Typical activities of this phase include intensive monitoring of portals for the assessment of product performance or the monitoring of customer opinions on the social web.

„Talk“ The company plays a more active role and takes an important step from social media management to social CRM. It enters into a dialog with customers. Activities include responses to queries in social media and the utilization of plat-forms for the performance of customer service and the provision of information. Transparent communications affect reputation and the perception of service quality.

„Co-Create“ Customers are integrated into corporate processes more and more tightly. Examples of activities in this phase include the integration of customer knowledge and experience into product development and the testing of new product con-cepts and functions. Another trait is the so-called peer-to-peer support: customers become actively involved in service and sup-port other customers in finding solutions to their problems, for instance. This can be encouraged by assessment functions and incentives in the form of gamification or of bonus or reward systems.

Modifications in various areas of the company are required for the realization of this development. They begin with the strate-gic anchoring of social CRM by means of the integration into processes and the connection of social media functions to the CRM system landscape. An essential topic here is the training of associates with the skills profile required for social media: form of expression, knowledge of the relevant processes, empathy for the customers – and excellent knowledge about the company’s own products and service functions. Guidelines must be worked out especially for communications as a joint effort by corporate communications and other divisions so that self-induced ”shit-storms” can be avoided. There is also a need to clarify where the social media activities will be located in the organization chart and coordinated and who bears the ultimate responsibility.

A number of conceptual, procedural, and technical questions must also be resolved: the challenge of verification must be mastered so that contents can be attributed to specific users. This hurdle can be cleared when using in-house services by means of a login used by customers to identify themselves. External platforms usually offer more information, but attribu-ting specifics to the customers is incomparably more difficult. Above all, the legal provisions regarding data protection and the use of data for advertising purposes must be observed.

The best time for digital positioning is now!

Now is the right time for action to achieve a successful move from social media management to social CRM and to network both current and planned activities efficiently and consistently into the existing channel landscape. Opportunities for positioning in the competitive environment exist, but the pace of dynamics on the market is fast and the “window of opportunity” consequently none too large. Companies should take advantage of it right away so that the needed capabilities can be developed – well thought through in their evolution and concept and tailored precisely to the market and corporate situation. Because of the fast growth in the reach of social media, a reactive approach will soon lead to massive rise in customer pressure. The fast build-up of skills which will then be necessary will entail significant risks while promising only little potential for positioning.


Taking out your smartphone to do your shopping from a poster – the digital transformation of customer

contact is already reality in South Korea. But creating a successful self-service program demands extremely

precise knowledge of customers and market environment. A fact which is frequently underestimated.

nce again, it is much later than planned when you finally get away from the office. On your way from work to the sub-way station, you remember that your refrigerator is totally bare. But there is not really time to make a detour to the nearest supermarket because you are meeting friends for your evening workout or dinner in a restaurant. Have you ever been in this situation?

Then just imagine this: the station where you are waiting for your train is lined with illuminated, virtual shop shelves – posters. As you walk past, you can simply use your smartphone or tablet to scan the items you want to purchase. When you have finished, press a button to submit your order, and the grocery bags will be delivered to your home the next day. You literally take care of the shopping you need to get done “in passing”! Fiction? Wish-ful thinking? Not at all.

need for self-service solutions on the rise

While this may sound like visions from a distant future to us, it has already become reality in some places. A business model of this type has completed a successful pilot run in Seoul, South Korea, where consumers eagerly took advantage of the offer.

O

Customer Self Services Require

In-Depth Understanding of Customers

Digitalized Customer Contact

The virtual supermarket in the subway station is a manifestation of an important trend: increasing mobility and networking of working world and personal life are causing the need for auto-mated, mobile self-service processes and systems to rise. The aim is to take care of daily needs faster and more simply as well as independently and to integrate these activities into daily life as smoothly as possible without requiring special effort. The desire for customer self-service offers can be clearly documented in figures. According to a worldwide study from Nuance (“Achieving Maximum Impact Through Self-service”, in: Nuance Customer Experience Experts Block, 2013), only about 33% of all consumers still want personal contact with a com-pany when they need something. Detecon predicted this trend toward a higher degree of automation in services back in 2010 in its study, “Customer Service of the Future”.

collaboration and customer experience create differentiation

The widespread use of mobile end devices is stirring new desires and permanently changing consumer behavior. But that is not all. As the availability of interactive opportunities broadens, the role of the end customer in general is changing. We are not exaggerating if we speak here of a digital evolutionary process.


Whereas customers were originally the more or less passive recipients of campaigns, information, and services distributed by companies, the rise of digitalization has continually inten-sified the degree of interaction as well as its direct and active integration into marketing, sales, and service processes – right up to the (for the moment) highest stage of the evolution pro-cess, “collaboration”.

Customers have become “prosumers”, meaning that their role is no longer restricted to that of consumers, but that they simultaneously act as producers. They create feedback about products and services, suggestions for improvement of business processes, or other valuable information they communicate to the company. Companies receive in this form valuable “conside-ration” from customers which they can in turn invest in product development or the optimization of their service.

By assuming this role, customers attain a significant level of autonomy and develop dynamic, selective buying behavior, which can weaken loyalty to brands and specific providers. As the options opened up by technology and permanent access to information multiply, consumer demands rise as well. Whether they intend to buy a product or request a service, the majority of

customers today always expect access to the seller without any restrictions of time or place plus a reliable, fast, and competent response. What is more, they want individual, useful offers tailored to their specific situation instead of campaigns with wide-area coverage. It goes without saying that the security of their personal data and the transparency of the processes must be as great as possible. Co-producing “digital customers” determine for themselves when and how they interact with a company. Their personal preferences become more and more definitive for their decisions for or against a certain seller.

The result is the expansion of classic customer relationship management by a major dimension: customer experience management (CEM). “Since the products and services them-selves have become virtually useless for differentiation purposes, companies must understand and realize customer expectations and desires even more precisely so that they achieve that certain difference setting them apart from the numerous competitors in their fields. Customer experience management is the key to securing emotional customer loyalty and revenue – in every phase of the customer life cycle,” states Detecon consultant and CEM expert Patrick Eberwein, who was the co-author of a study on this topic in 2010, with absolute confidence.

Fotos: Tesco.com

Self-service bridges the dichotomy between customer experience and efficiency

Competition – especially on saturated markets – has become stiffer, and stagnating revenues are putting intense pressure on companies to reduce costs. At the same time, better ways must be found to foster and secure the current and new customers despite their diminishing loyalty.

Ultimately, the success of a business strategy is decided at the point where customers come into contact with the products and services of a seller. This point in time is the “moment of truth” when a customer relationship can either be intensified in a positive direction or destroyed. Companies are rarely given a second chance because the alternatives available to customers on today’s markets are simply too numerous.

Companies find themselves caught up again between the neces-sity of customer experience management to enhance the loyal-ty of their customers on the one hand and efficient balancing of costs on the other. The digital transformation of customer contact management builds the strategic “bridge” which makes it possible to master this challenge. Companies will be forced to drive forward the automation of their service processes and rely more and more on intelligent self-service solutions for their en-tire service portfolio along the customer journey from pre-sales to sales to service and retention management. While this is a technical challenge and undoubtedly a monetary investment of considerable proportions, it also involves at its core the design of a transformation which is customer-centric so that it can remain competitive in the long run.

The dominating belief is still that customer satisfaction and loyalty are nurtured by exceeding expectations. The creed evolved from this belief demands a consistent experience and enthusiasm at all of the touch points. Certainly a valid point – what customer does not enjoy being given royal treatment? But there is a question which is much more decisive – does this enthusiasm truly create loyalty and a long-lasting bond? Unfortunately, this is not quite so easy to accomplish.

Back in 2010, a worldwide study conducted among 75,000 respondents on the topic of customer loyalty by the consultancy Corporate Executive Board (CEB) came to the conclusion that merely exceeding expectations, although it generates enthusi-asm, does not enhance customer loyalty (“Shifting the Loyalty Curve”, CEB 2010). The secret to loyalty is basic: the simpli-city and speed of services! Bill Price, former customer service revolutionary at the online retailer Amazon, recognized years

ago: “The best service is no service” (Bill Price/David Jaffe: “The Best Service Is No Service”). Basically, customers do not really want any service at all; they want self-explanatory and reliable products and services which exclude as far as possible any need for customer service. If a customer nevertheless has a reason to contact the company, effective self-service opportunities which will enable the fastest and most convenient solution possible for the customer’s issue should be available.

But even the formula of simplicity appears to be too simple. The structures of customer target groups – depending on industry and company – are diversified and differentiated, and their needs can be completely different. For example, Generation Y customers, the so-called “digital natives”, are highly receptive to self-service, almost to the point that they will not accept anything else. A mail-order business with products for the best ager segment, on the other hand, must define simplicity in com-pletely different terms for its clientele.

customer-centric transformation requires detailed analysis

The fertile ground for the digital transformation of customer contact has been leveled because the majority of today’s custo-mers welcome, or even demand, the automation of buying and service processes. However, the prior analysis of customers and their preferences is becoming even more significant – and more complex – in the digital age.

Companies must obtain a more comprehensive picture of their customers and of the world in which they live which goes far beyond simple buying and service interests. Anyone familiar with everyday working life in South Korea will immediately understand the objectives of Tesco, the operator of the virtual supermarket: first, simplify shopping for customers and reduce the traffic in its own brick-and-mortar stores, and second, improve market penetration without having to increase the number of physical POSs. Very long working hours are the rule in South Korea, so massive numbers of customers crowd the brick-and-mortar supermarkets in the large cities in the time span immediately after the close of the business day. Endless lines at the cash registers are an everyday scene, and shopping often involves substantial investments of time and is a heavy burden on working consumers.

In addition, the retail food market in South Korea is fiercely competitive, and especially the lucrative catchment areas have already been developed by the hypermarkets of the national competitors. This is the situation which ultimately gave birth to the concept of virtual shopping on the way home from work.


andreas Penkert is Managing Consultant and advises companies on the subjects of organization and processes, service management, and CRM.

The transformation into a self-service company is a middle- to long-term journey. Whether the target is a 100% e-company or a multi-channel concept oriented to self-service depends entirely on the industry, target group, competitive environ-ment, and the company’s own philosophy. Retail trade, which typically involves standardized business transactions, will be able to travel down the road to a strictly online company more easily. In contrast, telecommunications firms will tend to move more in the direction of a convergent self-service mix with the option of personal consulting for complicated customer queries as a consequence of their rate structures and product and service diversity which can at times become very complex. The more complex and confusing the business is, the more cautiously a company should proceed in “taking along” its customers in the transformation process and in introducing them to the new, digitalized service world.

Digital transformation does not mean the end of personal dialog between companies and customers. Instead, it aims at the next stage of development in communication with autonomous,

collaborating customers and simple, efficient processes, there-by demonstrating that companies have understood what their customers really want.

Interested in additional information?Detecon is currently examining the maturity level of self-service opportunities from the customer and corporate perspectives. This market study encompassing multiple industries will appear at the beginning of 2014.

Speak to our experts and register to obtain this study exclusively!


Foto

: Tes

co.c

om

Mobility and success are somehow inextricably linked. But has that always been the case? And what do motor homes have in common with the cell phone?An essay.

Thoughts about Mobility – and What Cell Phones Mean for Us

Does Anyone Need a Dog Anymore?


A warm night in Cairo, I’m kissing the Pharaoh’s daughters – and yet, somehow, I’m still so sad.”Udo Lindenberg saw a lot of the world in 1989: Istanbul, New York, Athens ... But his longing to return home to Hamburg and the Reeperbahn never left him1.

He speaks in this song of a man constantly on the go in the past millennium who can find no consolation for the sense of alienation he feels when away from his chosen homeland, not even in the company of the most beautiful female companions or in alcohol. His less famous contemporaries set out in so-called “motor homes” for their travels, a widespread strategy at the time (which even today has lost none of its appeal). They followed the example set by snails and always carried their homes with them to ward off homesickness – and as protection from the experience of strangeness while in a strange place.

Somehow so sad ... A little of this feeling resonates in some of the meanings of the Latin adjective “mobilis”, which can also mean fickle and inconstant. If we follow the arguments of the American philosopher Michael Walzer, who regards mobility as more than just movement in space, our society has become “unsettled” as a consequence of the phenomenon. Walzer describes four types of mobility as the basis for his thesis: geographic mobility, which makes the change of location and the leaving behind of familiar space necessary, especially for professional reasons; social mobility between the social classes, which can lead to children taking up positions and roles in society which are different from those of their parents; marital mobility, expressed in the high divorce rates and other factors; and finally, political mobility, which is displayed in the general weakening of loyalty.3 But Walzer’s argumentation is in its essence tautological, and it ignores the independence, the free-dom which we gain from the dissolution of bonds, some of them oppressive. This is why mobility has primarily positive connota-

„ tions today. Mobility is cool; it is simply the sine qua non for the development of intelligence. Plants, which differ from animals above all because of their lack of mobility, do not develop intel-ligence. First and foremost, “mobilis” means flexible, movable, and fast. The person who is spatially and intellectually flexible, able to adapt, quick to respond, and travels through many different worlds at high velocity is the icon of our age.

Never before have people been as mobile as today – at least that is how it seems to us. But for thousands of years, mobility was the essential requirement for ensuring existence. Hunters and gatherers had to cover enormous distances if they wanted to survive. Entire peoples undertook long migrations on their search for new and better living conditions. As settled civiliza-tions began to develop, mobility remained a necessary part of economic success for many occupations – traders and merchants, for example.4 Speed and mobility also play a decisive role in the development of power structures. Just think of the superiority of “riders” over “foot soldiers”. “The taming of animals so that they could be ridden established a framework of mobility, power, and social differentiation. This structural context has remained in place throughout the ages and until today.”5 Even though horses may no longer necessarily come to mind, how often have we heard that it is not the big who defeat the small, but the fast who vanquish the slow? Even though horses may no longer necessa-rily come to mind, how often have we heard that it is not the big who defeat the small, but the fast who vanquish the slow?

So mobility and success go hand in hand, but so do mobility and a sense of homesickness, of loneliness, that makes us “so sad somehow.” How can we protect ourselves from this aspect? Motor homes, as we have already claimed, are not cool, as they are a symbol of a past epoch. But, above all, they are no help when – as described my Michael Walzer – intrasocial and interpersonal mobility catches up to us in our homes and

1 Udo Lindenberg, Reeperbahn 89 from the album „Bunte Republik Deutschland“, 1989

2 Cf. www.pons.eu

3 Cf. Michael Walzer: Spheres of Justice. New York, 1984

4 Cf. Gabriele Geiger: Wo ich nicht bin, da ist das Glück. In: Der Bürger im Staat, Volume 3, 2002

5 Cf. Andreas Schinkel. Das Bedürfnis nach Mobilität … und die Kunst des Müs-siggangs. Universitas Online



becomes our constant companion. When we “rethink” the motor home, we come up with the cell phone. Our cell phones make it possible for us to carry our complete (social) inventory around with us at all times. They have become our “protectors”. They ward off homesickness and homelessness by providing us with familiar images at every location; they protect us from loneliness by enabling us to remain in constant contact with our friends; they catch us in our social safety nets; they protect us from boredom by entertaining us with music, games, and videos; they even protect us from getting lost, on foot or driving, because they are also navigation devices as well as everything else.

Simultaneously they reveal to others who we are. They are more than just an accessory; they are expected to be expressions of our personal style, even our individuality. Viewed from this perspective, they are much like the colorfully painted camping buses whose drivers take their familiar surroundings into strange territory just like the motor home pilots, but they make a much more casual impression.

Perhaps we already sense that cell phones are beginning to deve-lop an independent character, that – now that they have become our “companions” – they even have the potential to become our “friends”. Friends in every phase of life, always close to us, style setters, entertaining, equipped with an almost inexhaustible access to knowledge, and simultaneously the crystallization point for our social networks.

The development of new functions does not have the goal of unveiling a “new carousel at the yearly fair of technological-ly superfluous features.”6 Instead, functions which reinforce the aura of the cell phone as an independent personality are successful. Even today, we can communicate with our cell phones by means of voice recognition; they listen to us, strive to understand us well, and are incredibly capable of learning. “Look at me when I am showing you something,” a smartphone of the latest generation seems to say when it stops the playback of videos as soon as the viewer takes his eyes off the screen. Even today, our cell phones sometimes seem to know better than we do what kind of physical condition we are in; they are closer to our pulse than we are. Will they soon be able to understand our emotions as well?

They already understand the gestures of our index fingers. The “Slide to unlock” introduced by Apple for its iPhones in 2005 and which subsequently turned our index fingers into a “digital conductor’s baton” was a groundbreaking invention. No other neuronal connections are so “tightly wired” at such an early stage and use such high-speed lines during the development of the brain in the embryonic and early childhood phases as those between the brain and the hand, between the brain and the index finger. Their technical realization in the form of pointing and swiping motions, the direct interaction between our index finger and the mobile devices, this “spark leaping across the gap between pointing, touching, and enacting is essentially the tech-nical embodiment of Michelangelo’s painting of ‘The Creation of Adam’7, in the enthusiastic words of the neurologist Florian Heinen in the FAZ.

Cell phones will also advance their ability to conduct a dialog. We will be able to converse with them, they will take a stand, and – in complete alignment with our wishes and our need for conflict – bring up new arguments which will either rein-force or contradict our opinions. They will comfort us when we are sad, using the right words and the right music. They will protect us from spontaneous financial expenditures which over-run our budget. The whispers about the new needs that could simultaneously come from them are on the other side of the same coin.

The developers who gave the cell phone operating system the name “Android” intuitively foresaw all of these developments. According to Wikipedia, android is “the designation for a robot which looks almost exactly like a human being and which acts in ways similar to a human being.” Well, cell phones do not look like people, and that is fortunate, because it protects us from having to traverse the uncanny valley, a phenomenon first de-scribed by Masahiro Mori, a Japanese robotics expert: if robots become too similar to humans in their conduct, our acceptance of them declines significantly because they give us an uneasy feeling. There is no reason to fear this happening with cell phones.

Really? Isn’t there something about the development described above which we feel is eerie?

6 Florian Heinen: Der Zeigefinger: Schlüssel einer neuen Kultur. Frankfurter Allgemeine Zeitung, 15/05/2013

7 Florian Heinen, op. cit.


In his book “Discipline and Punish – the Birth of the Prison”, which appeared in Paris in 1975, Michel Foucault examined the rise of power and the role of discipline. Society appears to him to be crisscrossed with many different, intangible lines of power – people do not possess power, but from certain positions they can control it in a limited scope. The architec-ture of the Panoptikum, a prison designed by the English phi-losopher Jeremy Bentham, appears to Foucault to be suitable as a means of characterizing the power formations which have developed since the 16th century. The Panoptikum is a circular structure in which all of the cells are open. The design enables guards in a tower located in the middle of the Panoptikum to look into all of the cells8 .

The situation made it almost impossible for prisoners to keep secrets or to have anything of a private sphere. Is the situation any different for us free citizens in the 21st century with our cell phones? Open cells – what do our new friends, our “cell phones”, reveal about us, how much of this do they pass on to others, to whom do they pass the information on?

If we are not careful, our new friends and the data we often provide unawares may disclose more about us than we can imagine – and more than we really want to be known. So we should take Kant’s motto for enlightenment and adapt it to the use of our cell phones: Have the courage to make use of your own cell phone with reason.

8 Michel Foucault: Discipline & Punish: The Birth of the Prison, Vintage, 2nd Edition, 1994

christof Strohkark, who is a member of the partner team Financial Services, has been working in the field of financial services for more than 15 years and advises banks and insurance companies on strategic concepts, customer service, and sustainability.

Knowledge@Detecon

Mission Future:ICT 203245 Theses on the Road to Tomorrow

20 years from now, IT in its classic form will no

longer exist. But what will be the consequences of

this transformation? How will the developments

in ICT impact society, individuals, and companies?

How will non-technological factors affect the ICT

landscape of 2032? What benefits will these tech-

nological and non-technological changes bring with

them? And where are the opportunities and risks?

Forty-five theses broadly describe – sometimes

provocatively, sometimes surprisingly – how

information and communications technology will

influence life, society, and business in the year

2032. Application areas such as automotive, energy

business, financial services, lifestyle and housing,

and health care will change radically and continue to

evolve under the influence of ICT. ICT for everyone,

everywhere, in virtually every object – that will be the

outstanding characteristic of the world of tomorrow.

Order online:

You can order your free copy of the book

by writing to the following address:

[email protected]

Det

econ

Man

agem

ent

Rep

ort

blu

e •

1 /

2013

Detecon Management Report blue • 1 / 2013

www.detecon-dmr.com

DMRDetecon Management Report

Edition 1 / 2013blue

Leading digital!

leading digital!

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We Lead Our Clients into the Digital Future.

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We make ICT strategies work

Digital Transformation :Using Architecture as a Strategy for Goal-

Oriented Management and Implementation

Digital Business Models : New Role as Manager of the Customer Experience

Digitalized Customer Contact : Customer Self Services Require In-Depth

Understanding of Customers

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