Becoming a Nimbler, Smarter Enterprise in a Business 4.0 World
The retail industry has reached an inflection point where technology-driven transformation is a mainstay and crucial to a company’s growth and market value. From a place of scarcity, we've now migrated to an age of abundance — i.e., we have a plethora of technologies, resources and data. Technologies like artificial intelligence (AI), cloud, and Internet of Things (IoT) are vital enablers of advancement. They're creating game-changing differentiation for organizations that have fundamentally transformed their businesses and operating models.
For many retailers however, the biggest barriers to becoming a responsive enterprise continue to be legacy processes and systems, an albatross around their necks that they're struggling to get rid of. Becoming a nimble enterprise encompasses not only creating a strong technology foundation, but also recasting the company culture, structure, and ways of working. More essentially, it's about knowing where and how to intercept the value chain with technological interventions.
Companies performing well realize that data is the new oil and are putting their humongous data to good use. By harnessing data and new technologies, they're transcending from limited analytics into a new realm of deep insights in near real time, amplified by the deep context and expertise of their workforce, thereby unlocking exponential value.
A new study surveyed senior executives in retail and other industries on their level of investment in digital transformation technologies, as well as analyzed their preparedness for the “Business 4.0” era. There are four key behaviors of Business 4.0 used to identify digital transformation success: driving mass personalization, creating exponential value, leveraging ecosystems, and embracing risk.
The study revealed that 20 percent of retailers have not adopted any of these behaviors, lagging industries such as telecom, manufacturing, and banking and financial services. While retailers are striving to be future-ready, they struggle with bringing new innovations to life that could have real impact on their businesses. These companies are also struggling in terms of revenue growth, with only one in five (22 percent) expecting more than 10 percent revenue growth over the next three years. In comparison, 60 percent of businesses that have embraced all four Business 4.0 behaviors expect more than 10 percent revenue growth over the same time period.
When surveyed on their level of trust for certain technologies, retail executives willingness to adopt the technologies fell below other industries. Of note, only 29 percent would use AI to develop new business models to create customer value, and 39 percent would consider using automation to free up workers. Coincidentally, embracing risk is the behavior least likely to have been adopted by the surveyed companies across industries. A failure to embrace risk exposes businesses to disruption by firms willing to experiment and implement new business models.
As an industry with potential to realize immense gains by the utilization of technology, retail must emphasize business transformation efforts. There's an increasing amount of technologies such as AI, machine learning and IoT becoming mainstream, bringing in new offerings that retailers are turning towards to improve their businesses and become more agile. For example, some retailers are utilizing blockchain to track and verify the authenticity of products in their supply chain, while others are using AI to dramatically reduce shelf lives. Retailers don't have to adopt everything overnight to start generating value from these technologies. The key is to make progress by prioritizing digital transformation use cases and experimenting with proofs of concept to begin seeing meaningful results.
Rajashree R. is the global head of retail strategic initiatives, products and innovation at Tata Consultancy Services, a consultancy services company that combines tech expertise and business intelligence to catalyze change and deliver results.
Related story: How Technology is Changing the Retail Customer Experience
Rajashree R. is the Global Head of Retail Strategic Initiatives, Products and Innovation at Tata Consultancy Services, a consultancy services company that combines tech expertise and business intelligence to catalyze change and deliver results.
She has spent over 20 years engaging with leading retailers in driving their transformation and innovation programs. In the recent years, she has largely been instrumental in helping retailers adopt a Digital First Model. In her current role, she incubated TCS Optumera™, an AI-based Merchandising suite, TCS Optuscai™, an AI-powered cognitive Supply Chain suite, and TCS Omnistore™, the Industry’s first microservices based Unified Commerce Platform. In addition, she leads the Retail Innovation Lab, which researches and experiments with new technology innovations in retail like AR/VR, Robotics, Image Recognition, Gaming, IoT, etc. Her current area of interest is to infuse Artificial Intelligence across the retail value chain helping retailers innovate to stay ahead and unlock exponential value.