Gartner: Seize the digital business moments
Interview with Peter Suhr, Managing Partner, Gartner
According to Gartner, 2015 will be characterised by the digital business moments that arise in the borderland between well-known business models and new technology. Spot these business moments and create some business from them, is the recommendation.
A few months ago, Senior Managing Partner at Gartner, Peter Suhr, was in dialogue with a major filling station customer. They were discussing opportunities to combine online supermarket shopping with physical collection at the filling station. Both parties saw this as an obvious opportunity. Online supermarkets find it difficult to reach the more sparsely populated areas of the country, and the filling stations would have more people stopping by, who might buy more than the usual petrol and a hotdog.
"Fourteen days after our chat I could see that nemlig.com and Q8 had launched their joint Click & Collect concept, which was exactly what I was talking to the competing filling station about. This shows just how fast we need to move today. Previously, you could have a chat like that and it would then take two to three years for someone to put the good idea into practice. Today, it takes two weeks," says Peter Suhr. He explains how in terms of Click & Collect, Internet-based funeral directors and other online concepts, Gartner's major headline for 2015 – and thereafter – is a radical rethink of well-known business models in favour of a more digitally integrated company practice.
Checking your place in the ecosystem
One of the things that shocks Peter Suhr the most is how there seem to be many well-established companies today that have not yet drawn up a clear strategy for how they will implement new technology in their business model. Without naming names, many still rely on yesterday's, rather than tomorrow's, way of selling products.
"If you sell pumps, you look at the others selling pumps in the market. If you sell oil, you look at the others selling oil in the market. The point is that you should start to look elsewhere to spot your competition, since it could just as well come from your subsupplier, or from a garage in Singapore where two young guys have invented a whole new way of selling the same product," says Peter Suhr.
"It's a question of checking your place in the new ecosystem, and where your products are. You have to ask yourself whether anything in the ecosystem can be digitised? Whether a digital business moment can be wedged in between the customer and the purchase?”
Doesn't believe in e-business
Peter Suhr recently read how a CFO at the Lidl supermarket chain had said that he would not invest in e-business models. For how would he be able to pay the rent for the many physical shops?
"This CFO should perhaps instead consider whether Lidl has the right business model. Today's supermarket chains need to take into account that in the future more and more goods flows will bypass the physical shops. How will they handle this? Will they deliver people's shopping themselves? Get others to do it? If they get others to do it, can this delivery opportunity be used in new ways? It's more and more important to ask ourselves these questions," says Peter Suhr.
From back office to front office
Finance systems, payroll systems, stock inventory systems, logistics systems and customer databases. Companies have had lots of IT in their organisations, for a long time, but usually hidden away in the "back office".
"If you take a look at Danish companies you will see that many still use old legacy systems that do not provide very good IT support to the company. Their IT keeps track of the underlying systems, but this is not a parameter of today's competition. Today's competition takes place in the front office, where customers meet the company. Take Amazon. They have been very sharp at understanding the customer-first philosophy. An example is the famous Amazon moment, when you get the hint, as you are making a purchase, that other buyers have also bought a related product. This function pops up automatically," says Peter Suhr, comparing this with the "1864" historical series screened by DR (the Danish Broadcasting Corporation).
"After the series had been televised, DR advertised how, up to a certain date, you could see the entire series on DR's website. Why only up to a certain date? Why can't you see it when you want to? The reason is that DR is still clinging to some old models for how digital TV is transmitted."
In 2014, at their annual conference Gartner introduced the concept of "Bimodal IT". Bimodal IT signifies IT at two speeds, based on how most companies and organisations today have a need for both classical operational competences and more development-oriented IT competences. The same resources should probably not be deployed to handle both types of IT.
"Solid IT can be compared with a marathon runner, as sound, reliable IT that will get to the finishing line, at its own pace. The second, more agile type of IT is more of a sprinter. It must be able to support the digital business moments that can suddenly arise, and that require a rapid response," says Peter Suhr. "One half of IT operates with month- and year-long horizons, while the other half must be able to operate with horizons of just days or weeks."
Scope for development
Peter Suhr concludes by describing how he recently spoke to an American who, during a visit to Denmark, had been surprised by the way that our radiator thermostats work.
"They reminded him of the thermostats they used in the USA in the 1950s, he said. We Danes go round turning the knob on each radiator, and if the valve has got stuck we have to bang on the radiator to get it moving again. I'd been boasting about Denmark's long and proud engineering tradition, but I had to admit that we were behind the times in that respect. This shows how we still have plenty of scope for technological development in this country, even in major industries and large companies."
Premium product on the way out
For many years, you commanded a privileged and lucrative position if you held the premium product in a particular industry. But according to Peter Suhr, that position is no longer guaranteed.
"Take the pharmaceutical industry, for instance. Before, if a competitor had a poorer product than yours, there was no risk. You would always win the contest, because you had the premium product. But imagine that your competitor launches a new package in the market where, besides the product itself, the customer is called up twice a week to check whether he has remembered to take his medicine, get a little exercise, and eat healthily. The premium product will suddenly no longer be the premium choice. Smart companies are thinking up new delivery models, which leaves no time to sit back and enjoy your position in the market. Instead, you have to fight to retain it."