Ecosystm had predicted that in 2020, AI and analytics would be a top priority for organisations as they embarked or continued on their Digital Transformation journeys. What we saw instead was organisations collecting the right data – but handling more pressing matters this year. They focused more on cybersecurity frameworks, enabling remote employees and the shifts in product and service delivery. In 2021, as organisations work their way to recovery, they will re-evaluate their AI and automation roadmaps, more actively. Ecosystm Advisors Alea Fairchild, Andrew Milroy and Tim Sheedy present the top 5 Ecosystm predictions for AI & Automation in 2021.
This is a summary of the AI & Automation predictions, the full report (including the implications) is available to download for free on the Ecosystm platform here.
The Top 5 AI & Automation Trends for 2021
- AI Will Move from a Competitive Advantage to a Must-Have
The best practices and leading-edge technology-centric implementations, over the years gives a very good indication of market trends. In 2018 and 2019 AI-centric engagements were few and far between – they were still in the “innovation stage” as trials and small projects. In 2020, AI was mentioned in most applications, showcased as best practices. AI is currently a competitive advantage for businesses. CIOs and their businesses are using AI to get ahead of their competitors and highlighting these practices for external recognition.
That also means that it is a matter of time before AI becomes a standard practice – processes are smart “out-of-the-box”; intelligent applications are an expectation, not the exception; systems learn because that is how they were designed, not as an overlay. If your competitors are using AI today to get ahead of you, then you need to also use AI to catch up and keep up. In 2021, having a smart business will not get you ahead of the pack – it will move you into it.
- AI Will Thrive in Areas where the Cost of Failure is Low
While organisations will be forced to adopt AI to remain competitive, initial exploration of AI solutions will be in areas that they consider low risk. The Financial Services, Retail, and other transaction-oriented industries will use AI to drive improved personalisation, increase customer retention, and improve their ability to lower risk and combat fraud. These are process-driven areas, where manual processes are being enhanced and enriched by AI. Although machine learning and other AI technologies will help improve the speed and quality of services, they will not be a replacement for many of the more complex business practices that companies and their employees frequently overlook to automate. The ‘low hanging fruit’ to add AI to will come first, with various degrees of success.
There will be industries and processes where organisations will be more skeptical about adopting AI. If Google finds a wrong translation or gives a wrong link, it is not a big concern, unlike a wrong diagnosis or wrong medication. In areas that are crucial to our well-being – such as healthcare – AI does not yet have the trust for acceptance of society. There are still questions around ethics and algorithm concerns.
- Technology Providers Will Stop Talking about AI
Technology vendors highlight what they consider their key differentiators, that show that they are ahead of the game. When every piece of software and hardware is intelligent, vendors will stop talking about the fact that they are intelligent. This may not fully happen in 2021 – but ENOUGH technology will be intelligent for those who have not yet made their software smart to understand that they cannot talk about its intelligent capabilities as that just shows they are behind the market.
The good news is that the less we hear about AI, the more intelligent applications will become. AI is quickly becoming a core capability and a base expectation. Systems that learn and adapt will be standard very soon – but be wary, as significant market changes can break these systems! Many companies learned that the pandemic broke their algorithms as times were no longer “normal”.
- Enterprises Will Seek Hyperautomation Solutions
RPA will increasingly become part of large enterprise application implementations. Technology vendors are adding RPA functionality either organically or through acquisitions to their enterprise application suites. RPA often works in conjunction with major software products provided by companies such as Salesforce, SAP, Microsoft, and IBM. Rather than having an operative enter data into multiple systems, a bot can be created to do this. Large software vendors are taking advantage of this opportunity by trying to own entire workflows. They are increasingly integrating RPA into their offerings as well as competing directly in the RPA market with pureplay RPA vendors.
As the RPA offerings continue to mature, enterprises seek to scale implementations and to automate non-repetitive processes, which require more intelligence. They will seek to automate more processes at scale. They will demand solutions that process unstructured data, handle exceptions, and continuously learn, further increasing productivity. Intelligent automation typically incorporates AI, particularly voice and vision capabilities and uses machine learning to optimise processes. Hyperautomation turbo charges intelligent automation by automating multiple processes at scale – and will become core to digital transformation initiatives in 2021.
- Businesses Will Put “Automation Targets” in Place
2020 was the year that many businesses started seeing some broad and tangible benefits from their automation initiatives. Automation was one of the big winners of the year, as many businesses took extra steps to take humans out of processes – particularly those humans that had to be in a specific location, such as a warehouse, the finance team, the front desk and so on (because of the pandemic, they were often working at home instead). Senior management is seeing the benefits of automation, and they will start to ask their teams why more processes are not automated Therefore we will start to see managers put targets around a certain percentage of tasks automated in an area – e.g. 70% of contact centre processes will be automated, 90% of the digital customer experience for a certain outcome will be automated and so on. Achieving these numbers may not be easy, but the targets will change the mindset of people designing, implementing, and improving processes.
The Retail industry has had to do a sharp re-think of its digital roadmap and transformation journey – Ecosystm research shows that about 75% of retail organisations had to start, accelerate, or re-focus their digital transformation initiatives. However, that will not be enough as organisations move beyond survival to recovery – and future successes. While retailers will focus on the shift in customer expectations, a mere focus on customer experience will not be enough in 2021. Ecosystm Principal Advisors, Alan Hesketh and Alea Fairchild present the top 5 Ecosystm predictions for Retail & eCommerce in 2021.
This is a summary of the predictions, the full report (including the implications) is available to download for free on the Ecosystm platform here.
The Top 5 Retail & eCommerce Trends for 2021
- There Will Only be Omnichannel Retailers
The value of an omnichannel offer in Retail has become much clearer during the COVID-19 pandemic. Retailers that do not have the ability to deliver using the channel customers prefer will find it hard to compete. As the physical channel becomes less important new revenue opportunities will open up for businesses operating in adjacent market sectors – companies such as food and grocery wholesalers will increasingly sell direct to consumers, leveraging their existing online and distribution capabilities.
Most customers transact on mobile device – either a mobile phone or tablet. New capabilities will remove some of the barriers to using these mobile devices. For one, technologies such as Progressive Web Apps (PWA) and Accelerated Mobile Pages (AMP) will provide a better customer experience on mobile platforms than existing websites, while delivering a user experience at par or better than mobile apps. Also, as retailers become AI-enabled, machine learning engines will provide purchase recommendations through smartwatches or in-home, voice-enabled, smart devices.
- COVID-19 Will Continue to be an Influence Forcing Radical Shifts
In driving the economic recovery in 2021, we will see ‘glocal’ consumption – emphasis on local retailers and global players taking local actions to win the hearts and minds of local consumers. There will be significant actions within local communities to drive consumers to support local retailers. Location-based services (LBS) will be used extensively as consumers on the high street carry more LBS-enabled devices than ever before. Bluetooth beacon technology and proximity marketing will drive these efforts. Consumers will have to opt-in for this to work, so privacy and relationship management are also important to consider.
But people still want to “physically” browse, and design aesthetics of a store are still part of the attraction. In the next 18 months, the concept of virtual stores that are digital twins will take off, particularly in the holiday and Spring clearance sales. Innovators like Matterport can help local retailers gain a more global audience with a digital twin with a limited technological investment. At a minimum, Shopify or other intermediaries will be necessary for a digital shop window.
- The Industry will See Artificial Intelligence in Everything
AI will increase its impact on Retail with an uptake in two key areas.
- Customer interactions. Retail AI will use customer data to deliver much richer and targeted experiences. This may include the ability to get to a ‘segment of one’. Tools will include chatbots that are more functional and support for voice-based commerce using mobile and in-home edge devices. Also, in-store recognition of customers will become easier through enhanced device or facial recognition. Markets where privacy is less respected will lead in this area – other markets will also innovate to achieve the same outcomes without compromising privacy but will lag in their delivery. This mismatch of capability may allow early adopters to enter other geographic markets with competitive offers while meeting the privacy requirements of these markets.
- Supply chain and pricing capabilities. AI-based machine learning engines using both internal and increased sources of external data will replace traditional math-based forecasting and replenishment models. These engines will enable the identification of unexpected and unusual demand influencing factors, particularly from new sources of external data. Modelling of price elasticity using machine learning will be able to handle more complex models. Retailers using this capability will be in a better position to optimise their customer offers based on their pricing strategies. Supply chains will be re-engineered so products with high demand volatility are manufactured close to markets, and the procurement of products with stable demands will be cost-based.
- Distribution Woes Will Continue
Third party delivery platforms such as Wish and RoseGal are recruiting additional international non-Asian suppliers to expand their portfolios. Amazon and AliExpress are leaders here, but there are many niche eCommerce platforms taking up the slack due to the uneven distribution patterns from the ongoing economic situation. Expect to see a number of new entrants taking up niche spaces in the second half of 2021, sponsored by major retail product brands, to give Amazon a run for their money on a more local basis.
As the USPS continues to be under strain, delivery companies like FedEx in the US who partner with the USPS are already suffering from the USPS’s operational slowdown, in both their customer reputation and delivery speed. In 2021, COVID-19 – and workers’ unions – will continue to impact distribution activities. Increased spending in warehouse automation and new retail footprints such as dark stores will be seen to make up for worker shortfalls.
- China’s Retail Models Will Expand into Other Markets
China’s online businesses operate in a large domestic market that is comparatively free of international competitors. Given the scale of the domestic market, these online companies have been able to grow to become substantial businesses using advanced technologies. All the Chinese tech giants – among them Alibaba, ByteDance, DiDi Chuxing, and Tencent – are expanding internationally.
China’s rapidly recovering economy puts those businesses in a strong position to fund a competitive expansion into international markets using their domestic base, particularly with their Government’s promotion of the country’s tech sector. It is harder to impose restrictions on software-based businesses, unlike the approach that we have witnessed the US Government take for hardware companies such as Huawei – placing constraints on mobile phone components and operating systems.
These tech giants also have significant experience in a Big Data environment that provides little privacy protection, as well as leading-edge AI capabilities. While they will not be able to operate with the same freedom in global markets, and there will be other large challenges in translating Chinese experience to other markets – these tech players will be able to compete very effectively with incumbent global companies. Chinese companies also continue to raise capital from US stock exchanges with The Economist reporting Chinese listings have raised close to USD 17 billion since January 2020.
Authored by Alea Fairchild and Mike Zamora
There have been a few articles recently about investment companies looking to buy large national US retail companies, for example, JC Penney and Dillards. Their historical approach was to purchase the land and develop the sites as a retail centre and operate their stores. They then lease the remaining retail space to other retailers. It is a business model which has been in use for many decades.
Historically a long and deep negative economic cycle has caused some retail operators/developers to sell part of their operations. This happened in the US in 1995 with Sears. The real estate development and investment companies’ interest is in exploring if there is a higher and better use for the properties. That is the essence of land economics, going from a lower economic use to a higher income/value use.
A key difference this time is the use of advanced technology. We see this in many dimensions: building systems and operations; retail management, social media, entertainment and food and beverage (F&B) operations.
The Smart Building revolution in Retail is about changing the management philosophy of buildings and using technology to aid in the process. The defining characteristic of building smarter is not the application of technology or a function of outcomes on energy use or maintenance. Instead, it is a commitment to leveraging the overall footprint to achieve the goals that perhaps inspired the building in the first place.
Evolution of Space for Retail Activities
The old axiom of real estate is location, location, location. This means that every retail centre will have to be assessed for its best purpose for its locations and surrounding environment. Retail has been morphing in the past few years from a traditional purpose of picking something up to an intersection of shopping and entertainment. This combines on-premise activities with a buying transaction which can be handled either onsite or online. Technology infrastructure investment opportunities are driven by optimising the customer retail experience.
Retail centres are seeking new functionality, including the adaptation of both design and use. Below are four approaches we believe can be used to assess each retail centre.
Reuse: Retail Lifecycle – Consumption to Redemption
There is a shift from consumers discovering and experiencing products in a physical retail space to retailers delivering on-demand. Many smaller retailers have capitalised on this by becoming pick-up points for online orders. They hope to increase footfall by drawing the customer into their own premises when retrieving their online delivery.
Retail centres need to expand on this trend to become a fulfilment location rather than a retail shopping space. Consumers could pick up online orders, recycle used goods, get products maintained and repaired, have appointments for personal services (dental, eye, hair, dry cleaning, etc.), try and test goods in mini-showrooms and collect points and benefits from gamification activities. By having a centralised exchange facility with multiple functionalities, consumer data can be leveraged to create marketing pull activities such as exclusive shopping events, and personalised customer service based on preferences and purchase history.
The current square meterage can be reallocated for distribution including the use of dark stores, green recycling centres for 3D printed product disposal and retail pick-up and exchange points. Staff will not be salespeople, but customer delivery service managers. The technology opportunities in this area would be re-allocation of network resources; focus on efficiency in delivery and customer satisfaction; and automation tools for customer service staff.
Redesign: Blended – Community Environment and Retail Experience
An alternative and more involved development approach would be to redesign the retail centre with deeper use cases to get more customers to come and stay longer. If a consumer stays onsite longer, there is a higher probability they will spend more at the retail centre. The future retail centre (Figure 1) would include additional space usages for a community space, a distribution centre for pick-ups, expanded F&B and remote working.
The technology opportunities are in two areas: customer experience and building operations. From a customer perspective, some technology examples would include entertainment and gaming in the F&B area, digital signage and mobile device technology to further engage people. For building operations examples could include technologies to control climate, lighting, security, energy management and building management.
Redevelop – Living Space for a Quality of Life
In some locations, the retail environment could have an oversupply of newly development retail centres. This means the optimal use for the centre would be to change it to a ‘Village Community’ – a community where people can live, work, learn and play. It would encompass multiple uses – multi-family residential units, a community centre, learning centres for younger children and a co-working area. The technology opportunies would be identical to a connected Smart City – at a lesser scale. Smart residential solutions would make the living environmental more user friendly. Retail could include digital media, mobile push features, enhanced and operational technology, energy management, climate control and security. Schools could include interactive and collaborative tools. Parks would have Wi-Fi and enhanced security. Connected Services (eg utilities, fire life safety, security and communications) could include operational technology systems for utilities, audio and video security systems and communication.
Repurpose: Knowledge & Learning Environment
For some retail centres a redevelopment may not be required, but would instead need a major repurposing of the space. The repurpose could be as a learning or healthcare centre. Learning environments require large open spaces with high ceilings for auditoriums or class rooms; common areas for gathering in between classes; onsite housing for students; food courts; and adequate parking for commuters. A healthcare environment would require patient reception, examination rooms, inpatient rooms, surgical units, and administrative offices. It could also include a medical learning centre.
The technology opportunities would be to develop a 24×7 site, with technologies to support the key purpose of the centre. The learning environment could include collaborative audio/video tools for Smart Classrooms. The social areas could including advanced food ordering and delivery systems and multiple player gaming centres for entertainment. The living areas would include systems and technology for smart living. The parking area could include enhanced security and surveillance systems, and smart parking systems. Behind the scenes, the building operations would need to upgrade energy management, building maintenance and management, digital food court operations, and a wellness air quality system.
The Future of Sustainable Retail Space
The decline of a retail centre is not necessarily a bad thing for a community. It is just the “Circle of Life” as an area evolves. Locations morph over the long-term. This has been seen in all the large cities around the world which have stood the test of time, eg. London, Paris, Amsterdam, New York, Tokyo and Beijing. The transformation also breathes fresh air into the surrounding environment. There are multiple layers of technology available to provide for an incredible Sustainable and Smart Community. It is large opportunity, not only for real estate developers, but also for technology vendors who understand the transformation process into the multiple variations of smart environments. Large real estate players and REITs will buy these retail portfolios and begin to transform older, low revenue, semi-vacant shopping centres into vibrant destination centres. Technology vendors should bring their ideas and systems to the attention of retail real estate owners early on in the the process. This will increase their chances of having their systems incorporated into the overall design concept and operational approach. It is a physical and digital transformation which improves neighborhoods, businesses and the city. It is a win for all.
Juniper Networks has entered into an agreement to acquire Massachusetts-based 128 Technology for USD 450 million that will enhance its AI-driven enterprise networking portfolio. The deal is expected to close by the end of 2020. The combined portfolio of 128 Technology’s Session Smart™ networking and Juniper’s Mist AI platform will bolster Juniper’s AI expertise in SD-WAN technology.
Ecosystm Principal Advisor, Ashok Kumar says, “Juniper Networks has been a major player in enterprise networking from the core to the edge of the network with SD-WAN, WLAN, and AI-driven applications aware network products. Juniper had strengthened their enterprise networks portfolio with the acquisition of WLAN vendor Mist Systems in 2019 which provided cloud-based management and an AI engine. With Juniper’s acquisition of 128 Technology the network transformation process in the industry will continue.”
The platform created by 128 Technology bases decisions on real-time sessions instead of legacy static systems and networking approaches. The newer system created through this by Juniper will use AI to automate sessions and policies for a full AI-driven WAN operation – from initial configuration to customisable actions across various levels, and AI-driven support.
In addition to this, the automation is expected to reduce overheads, minimise IT costs and deliver better client and user-experience through automated network optimised for client-to-cloud. The two companies also aim to optimise the network and user experiences for voice, 5G and collaboration. Juniper continues to evolve the enterprise networking portfolio adding to the acquisition of WLAN start up Mist Systems for USD 405 million last year. Juniper’s AI -driven SD-WAN and networking products and services for enterprises and end-users is a step towards smart LAN and WAN environments.
A recent study on The Future of the Secure Office Anywhere, conducted by Ecosystm on behalf of Asavie found that 56% of global organisations are looking to improve employee experience, as they look beyond the COVID-19 crisis. The feedback from over 1,000 business and technology leaders globally, also finds that 55% of the organisations are also focused on digital transformation. This will require a re-evaluation of enterprise network solutions, to give employees seamless access to company resources as they continue to work remotely.
“Enterprise communications is being transformed to a user-centric, session-oriented distributed model from a legacy network-oriented centralised WAN model. In the new remote working environment of Office Anywhere, the traditional use of VPN in combination with first-generation SD-WAN will become an impediment going forward. Enterprises will need to re-design networks to address each end-user’s unique needs and their access to applications and all business resources as though they were a Branch of One.”
Telstra and Microsoft have extended their partnership to jointly build solutions harnessing the capabilities of AI, IoT, and Digital Twin technologies in Australia. The partnership will also enable both companies to work on sustainability, emission reduction, and digital transformation initiatives.
The adoption of cloud and 5G technology is already on the rise and creating opportunities across the globe. The Microsoft-Telstra partnership is set to bring together the capabilities of both providers for businesses in Australia and globally. Their focus on AI, IoT, cloud and 5G will enable Australia’s developers and independent software vendors (ISVs) to leverage AI with low latency 5G access to drive efficiency, and enhance decision making. This will also see practical applications and new solutions in areas like asset tracking, supply chain management, and smart spaces to enhance customer experience.
Technology Enhancing the Built Environment
Microsoft Azure and Telstra’s 5G capabilities will come together to develop new industry solutions – the combination of cloud computing power and telecom infrastructure will enable businesses and industries to leverage a unified IoT platform where they can get information through sensors, and perform real-time compute and data operations. Telstra and Microsoft will also build digital twins for Telstra’s customers and Telstra’s own commercial buildings which will be initially deployed at five buildings. Upon completion, the digital twin will enable Telstra to form a digital nerve centre and map physical environments in a virtual space based on real-world models and plot what-if scenarios.
Telstra CEO, Andy Penn says, “If you think about the physical world – manufacturing, cities, buildings, mining, logistics – the physical world hasn’t really been digitised yet. So, how do you digitise the physical world? Well, what you do is put sensors into physical assets. Those sensors can draw information around that physical asset, which you can then capture and then understand.”
Ecosystm Principal Advisor, Mike Zamora finds the comment interesting and says, “It isn’t so much that the physical world is digitized – it is more about how digital tools enhance and enable the physical world to be more effective to help the occupier of the space. This has been the history of the physical space. There have been many ‘tools’ over time to help the physical world – the elevator in the late 1880s enabled office buildings to be taller; the use of steel improved structural support, allowing structural walls to be thinner and buildings taller. These two ‘tools’ enabled the modern skyscraper to be born. The HVAC system developed in the early 1900s, enabled occupants to be more comfortable inside a building year-round in any climate.”
“Digital tools (sensors, etc) are just the latest to be used to enhance the physical space for the occupant. Digital twins enable an idea to be replicated in 3D – prior to having to spend millions of dollars and hundreds of man hours to see if a new idea is viable. Its advent and use enable more experimentation at a lower cost and faster set up. This equates into a lower risk. It is a welcomed tool which will propel the experimentation in the physical world.”
Talking about emerging technologies, Zamora says, “Digital twins along with other digital tools, such as 3D printing, AI, drones with 4K cameras and others will enable the built environment to develop at a very quick pace. It is the pace that will be welcomed, as the built environment is typically a slow-moving asset (pardon the pun).”
“Expect the Built Environment developers, designers, investors, and occupiers to welcome the concept. It will allow them to dream of the possible.”
Telstra and Microsoft – Joint Goals
Telstra and Microsoft have partnered over the years over multiple projects. Last year, the companies partnered to bring Telstra’s eSIM functionality to Windows devices for data and wireless connectivity; they have also worked on Telstra Data Hub for secured data sharing between data producers, businesses and government agencies; and most recently collaborated on Telstra’s exclusive access to Xbox All Access subscription service to Australian gamers with the announcement of Microsoft’s Xbox Series X and Xbox Series S gaming consoles expected to release in November.
This announcement also sees them work jointly towards their sustainability goals. Both companies are committed to sustainability and addressing climate change. Earlier this year, Microsoft announced its plans to be carbon negative by 2030, while Telstra has also set a target to generate 100% renewable energy by 2025 and reducing its absolute carbon emissions by 50% by the same time. To enable sustainability, Telstra and Microsoft are exploring technology to reduce carbon emissions. This includes further adoption of cloud for operations and services, remote working, and piloting on real-time data reporting solutions.
Telstra also aims to leverage Microsoft technology for its ongoing internal digital transformation, adopting Microsoft Azure as its cloud platform to streamline operations, and infrastructure modernisation, including transition from legacy and on-premise infrastructure to cloud based applications.
The Education sector is currently facing immense challenges with enabling a remote learning environment and ensuring the safety of staff, employees, and students. This is on top of the usual challenges of resource optimisation, student retention, student recruitment, and so on. Moreover, today’s students are millennials and post-millennials, who are digital natives – pushing educational institutions to adopt technology to attract the right cohort and provide an education that equips the students for the workplace of the future. The industry is being driven to transform, to keep up with student expectations on delivery, access to the resource, and how they choose to communicate with their educators and peers.
Ecosystm Principal Advisor, Dr Alea Fairchild says, “Education administration budgets are not increasing, but the pressure for quick response and more personalised interaction for students, means that administrators need to focus on interaction as the core competency. This requires institutions to automate as much of the volume back-office activity as feasible. The challenge is that individualised course structures mean more complex billing configurations.”
Dr Fairchild, who is active in international education in Belgium, says, “Individual study paths, including Erasmus exchanges, create a need for an audit trail on transfers, exemptions and completions.”
Ecosystm research finds that educational institutions are focused on adopting emerging technologies mainly to improve student services (Figure 1). The processes are being automated to reduce risks, errors and turnaround times for results and application processing, while also removing repetitive tasks so administration can focus on more value-add student-facing activities.
University of Staffordshire Embraces Digital Transformation
The University of Staffordshire is a “connected university” with an emphasis on industry connections and graduate employability. At the heart of Stoke-on-Trent and a regional hub for healthcare education, the university has six schools as well as a well-known degree in computer games design.
The UK-based University has over the years built a reputation for being keen on embracing digital as a way of better management, offering better student services, and serving the larger community. In 2018, Staffordshire University announced plans to build a multi-million-pound apprenticeship hub at its Stoke-on-Trent campus supported by tech giants including Microsoft to equip students with digital skills and to deliver more than 6,500 new apprenticeships over the next decade.
Last year, the University implemented a digital assistant, called Beacon, hosted on Microsoft Azure Cloud that provides support to their students on their learning and on-campus activities, including monitoring their emotional well-being and providing recommendations on groups and societies that they might be interested in. Beacon aims to ease the life of a university student, acting as a digital coach, and to minimise drop-outs due to stress and uncertainty.
Like its peer organisations, in the wake of the pandemic, the university was able to implement a blended learning program – offering courses through digital and remote learning systems from this semester for the entire 2020-21 session.
Focusing on Transformation through Automation
The University of Staffordshire, recently implemented robotic process automation (RPA) as part of its digital transformation plan. Talking about the role of RPA in Education, Dr Fairchild says, “This is a recent trend in higher education, with other new initiatives seen at the University of Auckland and University of Melbourne. RPA as a tool is used in Education to achieve the service levels required to meet both students’ and potential students’ expectations. This includes downloading student applications, processing language waiver requests, and entering academic results. These are all rule-based, high volume applications where automation increases speed and reduces errors.”
The University is using Blue Prism Cloud to access the RPA software and has plans for a automation-led digital transformation roadmap. Dr Fairchild says, “Blue Prism is based on Java and uses a Top-Down approach. It offers a visual designer with no recorders, scripts, or any intervention. Blue Prism is based on process diagrams that utilise core programming concepts and create the operational process flows to analyse, modify and scale business capability.”
The Staffordshire Digital team initially implemented RPA in the Finance department, as it involves a lot of administrative and back-office operations such as management of finance, records, tuition fees details and more. The University’s emphasis is to free up personnel and make them focus on more productive areas. This is beneficial for both the administrative staff’s feeling of personal contribution as well as student service satisfaction levels. “Using RPA gives the opportunity to universities to revisit, redesign, and improve their existing processes in line with expectations from digital native students. For prospective students, the next wave of RPA integration is intelligent machine learning algorithms to help route emails and integrate chatbots to address questions on course selection,” says Dr Fairchild.
Your CEO and Board are asking you to cut costs and do more with the IT budget.
This is the usual refrain you get used to as a Chief Digital or Information Officer. COVID-19 has increased the need for cost savings, without compromising your organisation’s mission. In Ecosystm’s on-going research, Digital Priorities in the New Normal – a COVID-19 Study, there are several common themes that emerge for retailers.
The impact of the cost-cutting measures that organisations are implementing, on CDOs and CIOs has been discussed in my report Managing Costs in the New Normal, where I provide guidance on how to address the necessary cuts.
Super Retail Group (SRG) recently presented at SalesForce Live on their success in using AI to improve their customer engagement – linking digital customer engagement and re-calibration of AI models. I want to highlight a couple of aspects of SRG’s experience for those retailers addressing these themes.
Increasing Customer Engagement
In a well-run online presence, retailers acquire a significant amount of data about their customers’ online behaviour. Data such as customer’s purchase history as well as how they traverse the site, how long they remain on the site and how they leave – often without purchasing. The challenge is how you can collect and use this data to improve the customer experience (CX) and increase sales in our new normal.
SRG, trading under banners such as Super Cheap Auto, BCF and Rebel across Australasia, has adopted a Salesforce tool called Einstein to address this challenge. SRG is using this AI engine to present product recommendations in several contexts across a customer’s online journey.
The impact of COVID-19 means overall sales across the group has declined. At the same time, online sales have grown to be generating almost 20% of the overall sales. Within these online sales, the AI recommendation engine has directly influenced 1 in 5 customer purchases.
SRG has developed a significant base of customer data since they introduced omnichannel and club offers; and are now seeing the return from this investment. Recommendation engines operate best when they have quality data in volume – and the proportion of and growth in, online customers using these recommendations is a guide to the quality of the platform.
Coping with Increasing Online Demands
Ecosystm research finds that over 56% of retailers are increasing their use of digital technologies for CX and will continue to invest after the immediate crisis. As always, getting the right value from this increased expenditure will be critical to a retailer’s price competitiveness and profitability.
With online sales growing dramatically, SRG’s online share of sales has more than doubled over April and May, the potential return from an engaging online CX has increased significantly. In turn, this has increased the importance of the online CX to a retailer’s competitive positioning and market share.
Tech leaders will be expected to provide direction on how to achieve this improvement, with AI engines offering an increasingly important tool in increasing the speed of response to changing customer behaviours.
With their mapping of customer journeys, SRG has been able to target specific stages in the journey for the use of the AI recommendation engine. Their focus on increasing the size and value of a customer’s basket provides the explicit measure of success. And SRG’s customers are showing their enthusiasm for these recommendations. The share of online sales influenced by the AI engine grew by over 600% in the past 12 months.
Customer expectations are continually being redefined by their experiences across the online environment, not just by retailers. In our new normal, with online becoming significantly important, retailers need to be consistently improving their offer to remain competitive.
Our study results shows that retailers are taking this step and will need to pay careful attention to their cost base and profitability while making these changes. SRG’s success with the AI engine shows that this is possible.
Lessons to Learn
COVID-19 has changed customer behaviour significantly, and tech leaders are identifying new tools and processes to improve their CX in line with these changes. SRG has continued its customer-focused omnichannel approach by adopting the Salesforce Einstein AI engine. By using one of their key sales metrics – size and value of basket – they have been able to assess the contribution of this tool.
There are some clear lessons for other retailers from their experience:
- Be very clear on why you are introducing the new tool – how you are going to achieve value.
- Understand the foundation that you need, to introduce new technology. You will find being successful using AI without quality data in volume will be difficult.
- Experiment and learn quickly from experience gained. In this cost-constrained world, don’t over-commit to a new approach without evidence.
- Use products and services that have a low cost of entry and a variable cost model. Cloud services generally provide this cost model.
Our research, along with press release such as SRG’s, show that retail leaders are continuously improving their customer engagement. As a tech leader, you need to be aware that customers will vote with their clicks, for retailers that are delivering.
And getting those non-essential costs out has never been more critical.
We continue to receive responses from the tech buyer community on the impact of COVID-19 on Digital Transformation initiatives, and the early business and technology measures that were implemented to combat the crisis. As the months go by, it is becoming apparent that organisations have implemented the early measures and are now looking ahead to their journey to recovery.
IT Teams realised that even if they had the right technology solutions, they were unprepared for the scale or capacity to extend these technology offerings to handle the sudden and enormous changes required to manage the crisis. Their cloud business applications, cybersecurity and collaboration solutions were simply not sufficient to meet the needs of the remote workforce. As organisations become more conscious of business continuity planning (BCP) for future eventualities, they will boost their technology capabilities, over the next 12 months.
Another area the study aims to explore is how optimistic is the business outlook, when it comes to expecting a return to normalcy. Only 3% of organisations are expecting a New Normal that is very different from where things were at the beginning of the year. About a third of organisations are expecting a return to normalcy by the end of the year, while the majority expect to recover by the middle of 2021. Also, some industries are more optimistic of a recovery than others. As an example, 35% of healthcare organisations expect a return to normalcy by the end of the year. This is a positive indicator, given that the industry has been in the forefront of the crisis, for nearly 6 months now.
More insights on the impact of the COVID-19 pandemic and technology areas that will see continued investments, as organisations get into the recovery phase, can be found in the Digital Priorities in the New Normal Study.
Global supply chains were impacted early and badly by the COVID-19 pandemic. The fact that the pandemic started in China – the leader in the Manufacturing industry – meant that many enterprises globally had to re-evaluate their supply chain and logistics. This was compounded by the impact on demand – for some sectors the demand went down significantly, while in others, especially for items required to fight the crisis, there was an unexpected spike in demand. There was also the need for many manufacturers and retailers to shift to eCommerce, to directly access the market and sustain their businesses. These sudden shifts that were required of the industry, opened up the need for a global supply chain that is more integrated, agile and responsive.
Last week, global heavyweights with a stake in the global supply chain, joined a consortium to work on creating that agility. This includes PepsiCo, BMW, Shopify, DHL, and the United States Postal Service and some emerging tech companies. The alliance will actively work on solutions to embed automation and digitalisation in the logistics and supply chain systems. While this consortium was formed last year, recent events have accelerated the need to fix a global problem.
Co-Creation and Innovation
LINK is a collaborative ecosystem, co-founded by Innovation Endeavors and Sidewalk Infrastructure Partners (SIP) to bring together emerging tech start-ups, institutions and global organisations to innovate and make supply chains resilient. The tech start-ups involved include the likes of Fabric, that has large automated micro-fulfillment centres for faster deliveries, and Third Wave Automation, that has developed automated forklifts with enhanced safety measures.
LINK aims to transform global supply chains, with the use of technologies such as automation, IoT, AI, and Robotics. The solutions developed by the start-ups will be tested in real-life situations, often in large organisations with complex operations. On the other hand, the start-ups will have access to the internal systems of these large organisations to understand the data and their organisational needs.
Ecosystm Principal Advisor, Kaushik Ghatak says, “COVID-19 has brought the need for supply chain agility and resilience to a completely new level of criticality. Companies in the ‘New Normal’ will need higher levels of nimbleness and flexibility to be able to recover from this crisis quickly and sustain in an increasing disruptive world. Increased ability to sense and respond to disruptions will be key to success. It will require better visibility of their entire supply chain, increasing efficiencies, building necessary redundancies (in form of inventory and capacity) where they are required the most – redundancy comes at a cost – and being flexible and innovative to cater to the rapid market and supply-side changes. Rapid digitalisation to build such capabilities will be a key to success.”
“Managing such rapid changes is usually a struggle for organisations with large and complex supply chains, because of the years of past practices, systems and culture. For them Innovation is a must, but the path to innovation is difficult. The LINK collaboration model is the right step towards addressing that challenge. Collaborating with start-ups can infuse new ideas, more innovative ways of solving a problem and rapid testing of use cases in the areas of IoT, AI and automation.”
Involving Start-ups for Innovation
This initiative is a great example of how larger enterprises are looking to leverage innovations by the start-up community. The Financial Services industry has been an early beneficiary, when it stopped competing with Fintech organisations, partnering with them instead. Other industries have started to recognise the benefits of fast pivots and the role start-ups can play.
Ecosystm Principal Advisor, Ravi Bhogaraju says, “Bringing together companies that have complementary and unique capabilities to solve industry issues is a great way to speed up experimentation and innovation.”
However, he recognises that forming alliances such as this, comes with its own set of challenges. “One of the key things to recognise in such a construct is that the team members from different possessions bring with them their unique belief systems, organisational and country cultural constructs. Expectations on how things should work, can become quite tricky to navigate. The talent and expertise in such an environment need to be facilitated be able to deliver high quality outcomes.”
Talking about how these constructs can work successfully, delivering what started out to deliver, Bhogaraju says, “An agile team setup can help tremendously as it uses two key principles – People and Interactions over processes; as well as Working models over documentation.”
“A clear expectation setting through contracting at the beginning of the project cycle can help establish the ways of working and rules of engagement. Increased regular feedback and problem solving should continuously fine tune the ways of working. This way teams can get through the norming process at pace and scale and eventually focus on outcomes, rather than fumble over each other and/or have ego flareups.”
“The key is to get to creative problem-solving working cohesively – the intent being to challenge the status quo – stepping outside the box and using all capabilities within the team. Blending the subcultures together using agile way of working and principles, can be a fantastic way to make that happen – failing which you have the challenge of trying to somehow bring together different work products, people and preferences.”