09 July 12 The Business Times
TECHNOLOGY companies have typically invested in back-end automation to keep their supply chains humming, but the focus is moving to the front-end, said Terence Foo, a partner with Accenture's products division across Singapore and Malaysia.
He said the growing awareness and tastes of consumers for technology products are triggering a strong need for manufacturers to redirect some of their investment dollars into consumer-facing spending, in order to stay relevant to them.
Many companies are prioritising building a good mobile and online presence, for example, because more users are reaching them via smartphones and tablets.
"Mobile Internet use is expected to replace the desktop by 2014, and that has major implications, especially for players in the fast-moving consumer goods segment," said Mr Foo in an interview with BizIT. "They need to know what consumers are looking for and what they're doing when they access mobile sites or apps. This is to ensure that the company's brand, product and customer experience is extended as seamlessly online as it is in real life."
The consultancy is also encouraging its clients to invest in online platforms which encourage customisation, he said.
Sportswear manufacturer Nike launched a service called NIKEiD way back in 1999, allowing customers to choose the material and colour of their sports shoes. This was later expanded to a richer version online, and Nike put out an iPhone app for it in 2009.
Mr Foo added that the process of allowing customisation is also a way of learning what users want.
Crunching all of this information is the trick, however. He said analytics is needed to make sense of all the data coming in.
Firms are aware of business intelligence software. Big tech players in Singapore such as Oracle and Microsoft have recently pointed to analytics as a hot growth area for them. Globally, the business intelligence software market hit US$12.2 billion in revenue last year, remaining a top IT priority, according to Gartner's first-quarter report.
Use of analytics
Mr Foo agreed that firms in Singapore are using analytics, but they tend to feed data coming from their back-end supply chains, instead of customer-facing activities, such as digital marketing campaigns and shopping information.
"Consumer goods manufacturers can (use) their analytics software to help them identify new markets and segments of shoppers to grow their revenues, and not just optimise supply chains," he said.
Focusing on the front-end could help provide firms a more complete overview of what their business strategies should be, he said.
Analytics has traditionally been a big firm purchase because larger players tend to have the volume of data and budget to justify investing in business intelligence.
But SMEs can also use analytics software to craft better products, to help them overcome some of the scale advantage that larger firms have, he pointed out.
And new models of software distribution such as the cloud can help SMEs access analytics products, without the older investment of running dedicated hardware to crunch information.
Still, much of the insight needs to translate down through the organisation for it to work, said the consultant. SMEs have the advantage of being more agile, and have access to data across the organisation that might otherwise be locked within departments in larger firms.
Accenture recently found that a health and beauty manufacturer managed to identify about 30,000 different products to take out of its catalogue of about 150,000. This helped it save cost and simplify its supply chain, but it had to reach down to its supplier base to make the change effective.
As far as industry estimates go, business-related data doubles every 1.2 years. Companies need to put together their enterprise data with external sources and unstructured data, and derive insight granular enough to make improvements at the process level, according to the firm.
The set-up on the back-end should reflect the flexibility needed to tackle the changes in the real world as well, said Mr Foo.
Open and modular architecture is the choice, over hardwired and customised systems that might lead to expensive updates and legacy issues later on, he said.
And data shouldn't just flow one way in, he said. "Companies are actively seeking useful data outside their organisations, and need an architecture that allows them to easily and methodically share their data (with partners). However, most data-sharing activities are ad hoc currently."
He said that consumer goods firms could greatly benefit from new media coming in from mobile and social apps, as well as location-aware services.
This data helps shape information coming in with contextual cues from the physical world, he explained.
"And companies can get far more from their social capabilities than marketing (value). Smart use of social capabilities allows companies to detect and resolve customer concerns and improve customer loyalty, as well as glean ideas for potential partnerships or for new products and services," he said.
The banking and telecoms industries have been leading the way with their use of social data, and consumer goods companies could learn from them, he added.