digital transformation –the road to operational efficiency · introducing simon kucher: global...
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Digital Transformation – The Road to
Operational Efficiency
Eddie Hartman
Simon-Kucher and Partners
Bob Irvine
Operations
Global Software Licensing
Viavi
Introducing Simon Kucher: Global presence
34 offices worldwide, > 1000 employees, €240m reven ue in 2016
Austria, ViennaBelgium, BrusselsDenmark, CopenhagenFrance, ParisGermany, BonnGermany, CologneGermany, FrankfurtGermany, HamburgGermany, Munich Italy, MilanLuxembourg, LuxembourgPoland, WarsawSpain, BarcelonaSpain, MadridSweden, StockholmSwitzerland, GenevaSwitzerland, ZurichThe Netherlands, AmsterdamTurkey, IstanbulUnited Kingdom, London
Australia, SydneyChina, BeijingChina, Hong KongJapan, TokyoSingapore, SingaporeUAE, Dubai
Brazil, São PauloCanada, TorontoChile, Santiago USA, AtlantaUSA, BostonUSA, Mountain ViewUSA, New YorkUSA, San Francisco
Asia-Pacific/the Middle East
EuropeAmericas
Source: Simon-Kucher & Partners
Licensing Live 2017 - GPSS and Framework 2
Simon-Kucher: Recognized Leader in Revenue Growth C onsulting
Source: Simon-Kucher & Partners
Source: brand eins Thema special edition: Consulting –industry report from brand eins Wissen and Statista, online survey, May 2014, 2015, 2016, 2017
brand eins Thema
Marketing, sales, pricing
Simon-Kucher & Partners
BCG
McKinsey & Company
1
2
3Source: Capital, survey of the best consultancies in France, October 2016
Capital
Marketing, sales, pricing
Simon-Kucher & Partners
on a par with
BCG
McKinsey & Company
1
The Economist
Pricing
Source: The Economist: Business Consulting: A Guide to How it Works and How to Make it Work
...
Forbes
Marketing, brand, pricing
Source: Forbes, Survey of best management consulting firms in the US, October 2016
Simon-Kucher & Partners
on a par with
Boston Consulting Group
McKinsey & Company
Simon-Kucher & Partners1
“The world’s leading pricing consultancy”
Licensing Live 2017 - GPSS and Framework 3
Source: Digitalization initiative core team assessment
The world is shifting towards digital, and successf ul companies must adapt.
Internet of Things Mobile payment
Internet 4.0
Earned content
Crowd funding Ratings and likes
…
Crowd servicesRobots/artificial intelligence
Smart partnering/ platforms
Omni-channel
Always on Customer
Virtual reality, augmented reality
Smart home
Social media
Active sourcing
Curated shopping
Big Data
Cloud technologies
BIM
XaaS
Conversational commerce
Predictive maintenance
Companies need to define:
� How they position themselves in the market
� What they do, and what they don't do
� How they enable their clients to be successful in the digitalized world
M2M
HW � SW
Blockchain
Hyper-personalization
Licensing Live 2017 - GPSS and Framework 4
* does not include "other"Source: Global Pricing & Sales Survey 2017 (n = 1,925)
2017 Global Pricing & Sales Study covered nearly 2, 000 respondents
…From all major industries
Industries % of total*
Building Materials/Construction 13%
Consumer 9%
Wholesale & Distribution 7%
Chemical 6%
Machinery 6%
Healthcare 6%
Automotive 4%
TIME 4%
Retail 4%
Software 4%
Industrial Services 4%
Transport & Logistics 4%
Banking & Financial Services 3%
Oil & Gas 3%
Insurance 2%
Electronics 2%
Travel & Hospitality 2%
Medical Technologies 2%
Raw Materials 2%
Paper & Packaging 1%
Energy & Utilities 1%
Over 40 countries
USA 641
Germany 290
Poland 148
France 119
Netherlands 93
UK 80
Switzerland 72
Turkey 55
Ireland 52
Spain 50
Austria 45Denmark 24
Japan 23Australia 20
Sweden 18Mexico 18
Belgium 16Other 161
B2B60%B2C
17%
EquallyB2B & B2C…
13%
13%
12%
12%
15%
11%
24%
< 10
10 to < 50
50 to < 100
100 to < 200
200 to < 500
500 to 1,000
>= 1,000
…And most firm types
Licensing Live 2017 - GPSS and Framework 5
A competitor77%
We did - intentionally
11%
We did - accidently
12%
Source: Global Pricing & Sales Survey 2017 (n = 1,925); Q21 Is your company currently involved in a price war?
Two-thirds of all industries are currently engaged in price wars, and most companies blame their competitors
Is your company currently involved in a price war?
Who started the price war that your company is involved in?
Most price wars are unknowingly started by companies with poor pricing practices.
Involved in a price war
47%
Price warin industry,
but not involvedin it, 20%
No price war in our industry
33%
Price wars lead to higher pricing pressure in the m ajority of industries.
Licensing Live 2017 - GPSS and Framework 6
Source: Global Pricing & Sales Survey 2017 (n = 1,925); Q19 Have you experienced higher price pressure in the last two years (i.e., the need to lower your prices or to give more discounts, rebates, promotional offers, etc.) than previously?; Q20 In your opinion, why has price pressure intensified? (select 1-3); Note that %s will not add to 100% given that respondents were able to select multiple answer choices
The increased pricing pressure in the last two year s is mainly driven by factors linked to digitalization
16%
23%
32%
33%
47%
Top 5 reasons for intensified price pressure:
Experienced higher price pressure in the last two years?
Yes, 75%
No, 25% Top 3 drivers
can all be linked to digitalization!
Low-price competition
Increased customer negotiation power
Increased price transparency
Increased professional procurement processes
Need to meet targets
Digitalization further increases pricing pressure.
Licensing Live 2017 - GPSS and Framework 7
Source: Global Pricing & Sales Survey 2017 (n = 1,925); Q12 Have you invested in digitalization initiatives in the past three years?Note: "Digitalization" is not synonymous with "digitization", as the latter merely refers to the conversion of data/information from analog to digital or binary.
81% of all companies surveyed have made investments in digitalization in the past three years
No19%
Yes
Have you invested in digitalization initiatives in the past three years?
� Digitalization: Use of digital technologies to change a business model or improve process efficiency of customer interactions.
� Goal: Increase the value-to-customer and ultimately produce incremental revenue or new revenue streams.
� Often includes a shift from a product-centric to a customer-centric model which focuses on selling a solution, and this requires changing the monetization model.
Licensing Live 2017 - GPSS and Framework 8
Source: Global Pricing & Sales Survey 2017 (n = 1,925), Q13 What is the main objective of your digitalization initiatives?; Q15 Have your digitalization initiatives had a visible impact on your topline?
Increasetopline andreduce cost
54%Increase topline
21%
Reduce cost21%
Other4%
What is the focus of your digitalization initiatives?
Yes23%
No77%
75%
Have your initiatives had a visible impact on your top line?
23%
Most companies fail to achieve topline growth with digitalization
75% of digitalization efforts focused on increasing the top line, but only 23% of all companies achieved the targeted impact
Licensing Live 2017 - GPSS and Framework 10
Source: Global Pricing & Sales Survey 2017 (n = 1,925); Q2 In the next three years, are unit cost reductions realistic at your company?; Q1 Which of the following is the biggest driver of future profit growth in your business?
Unit cost reductions realistic in the next 3 years?
Biggest driver of future profit growth?
57%
43%
No,unit costs will remain the same
or increase
Yes,significant unit cost reductions
are feasible
85%
15%
Growingrevenue
Reducing variableor fixed costs
Digitalization success is critical: As significant c ost reductions become less feasible,topline growth will be the main driver for future p rofits.
The ability to drive topline growth through digitiz ation will become critical in the near future
Licensing Live 2017 - GPSS and Framework 11
Conclusion: Digital Technologies Will Enable Busine ss Evolution
GRAPHICTBD
TODAY
Organizations first build products, then try to find people willing to buy them. Services come after the sale.
Customers look at existing products and determine to what extent they solve a problem
PAST
GRAPHICTBD
Organizations engage with customers to build a deep understand of their needs and subsequently build product and service solutions to exactly fit the customers and maximize customer life time value
Digital channels enable customers to get the products and services they need on demand
Licensing Live 2017 - GPSS and Framework 12
Source: Simon-Kucher & Partners
A Framework for Digital Transformation
Business Model Reinvention
Market Disruption Strategy
Align on Metrics for Digital Success
Digital Quality Management
Build / Refit Infrastructure for Digital
Digital Strengths Assessment and Organizational Readiness
Change Management Plan
Adopt Rapid, Cross-Functional Dev Methodology (Agile)
Enable Cross-Departmental Data Capabilities
Implement Digital Governance and Compliance
Digital Prospecting of Customer Needs / Monetizatio n Models
Adoption of Customer-First Solution Design Methodology
Assessment of Emergent Tech (XaaS, IoT, hyperlocal, omnipresent)
Optimize Online Sales Dialogue
Create Omnichannel Digital Demand Plan
Digital CLV / Cross-Sell / Lifecycle Optimization
CRM and Digitally Enabled Sales Excellence
Enable Supporting FunctionsBuilt IT Infrastructure
Align Executive Leadership
Deliver highest value digital products & services Customize Go-To-Market Strategy
Define Digital Vision and Strategy
Build DigitalFoundation
Develop customer-centric digital approach
Licensing Live 2017 - GPSS and Framework 13
© 2017 Viavi Solutions, Inc. 15
Our NSE products and solutions help service providers and IT organizations optimize and maintain many of the world’s largest and most complex networks.
• Test and Measurement
• Service Activation & Assurance
• Performance Management
Our OSP segment are renowned experts in the management of light, leveraging core optical coatings capabilities to design and manufacture a range of specialty products.
• Thin-Film Coatings
• Special-Effects Pigments
• Miniature Spectroscopy
• Anti-Counterfeiting Solutions
Viavi Solutions
Over 1,600,000 instruments in use around the world
45global offices
$811Mrevenue FY17
3000+employees
© 2017 Viavi Solutions, Inc. 16
Licensing: What problem set is OPS trying to solve?
• multiple systems – unique subject matter experts• process knowledge lost through attrition / reorganization• growing diversity in the types of licensing to meet market needs
Support & Scalability for Licensing
• Enterprise (Gemalto) – Operations / IT owned / managed• 40+ home-grown tools – R&D group owned / managed• sparse documentation
Disparate License Tool Ownership & Expertise
• distributed systems are hard to manage for control and maintenance• centralized IT managed systems are more robust and efficient
Inconsistent Maintenance of Licensing Servers
• multiple systems mean multiplied annual costs• soft costs -> ‘fire drills’ to support legacy / home-grown systems
Operational Costs
© 2017 Viavi Solutions, Inc. 17
Licensing Type III Licensing Type III
Develop LicensingDevelop Licensing
Licensing Type II Licensing Type II
License Flow – Current State
PRODUCT CONCEPTDefine Features
Product ComponentsMonetization Strategy
PRODUCT CONCEPTDefine Features
Product ComponentsMonetization Strategy
NEW PRODUCT INTROIdentify Parts
License MatrixPrepare Licensing
NEW PRODUCT INTROIdentify Parts
License MatrixPrepare Licensing LICENSING
{Entitlements}{Licenses}
{Software Binaries}
LICENSING{Entitlements}
{Licenses}{Software Binaries}
DEVELOPMENTDevelop SoftwareLicense Features
DEVELOPMENTDevelop SoftwareLicense Features
PRODUCT RELEASECatalog ItemsSoftware BOM Load Licensing
PRODUCT RELEASECatalog ItemsSoftware BOM Load Licensing
CUSTOMERReceive EntitlementsSoftware DownloadLicense Activation
CUSTOMERReceive EntitlementsSoftware DownloadLicense Activation
FULFILMENTProcess Order
Create Entitlements
FULFILMENTProcess Order
Create Entitlements
ORDER MANAGEMENTORDER MANAGEMENT
CRM SYSTEMCRM SYSTEM
SALESOrder for Products
SALESOrder for Products
KEY: OPS R&D PLM SALES CUSTOMER
© 2017 Viavi Solutions, Inc. 19
License Flow – Future Vision
PRODUCT CONCEPTDefine Features
Product ComponentsMonetization Strategy
PRODUCT CONCEPTDefine Features
Product ComponentsMonetization Strategy
NEW PRODUCT INTROIdentify Parts
License MatrixPrepare Licensing
NEW PRODUCT INTROIdentify Parts
License MatrixPrepare Licensing
GEMALTO{Entitlements}
{Licenses}{Software Binaries}
GEMALTO{Entitlements}
{Licenses}{Software Binaries}
DEVELOPMENTDevelop SoftwareLicense FeaturesRe-use Licensing
DEVELOPMENTDevelop SoftwareLicense FeaturesRe-use Licensing
PRODUCT RELEASE Catalog ItemsSoftware BOM Load Gemalto
PRODUCT RELEASE Catalog ItemsSoftware BOM Load Gemalto
CUSTOMERReceive EntitlementsSoftware DownloadLicense Activation
Order Products Online
CUSTOMERReceive EntitlementsSoftware DownloadLicense Activation
Order Products Online
AUTOMATED FULFILMENT
{E-Commerce}{Create Entitlements}
AUTOMATED FULFILMENT
{E-Commerce}{Create Entitlements}
ORDER MANAGEMENTORDER MANAGEMENT
CRM SYSTEMCRM SYSTEM
SW INSTALL -BASESW INSTALL -BASE
SALESOrder for Products
SALESOrder for Products
KEY: OPS R&D PLM SALES CUSTOMER
© 2017 Viavi Solutions, Inc. 20
Licensing: Future State & Benefits
Standardized tool for License Development • re-use license types across products / business units• enhance flexibility in software monetization• reduce OPS, R&D & PLM effort during New Product Introduction cycles
License Delivery linked to Order Management Systems • automate to reduce / eliminate OPS software delivery touch points• enable e-commerce• enable Install Base tracking for software• reduce revenue leakage
Improvements to Business Processes• automate control of royalty bearing items• automate validation of entitlement to Service Support• automate validation of entitlement to software / firmware updates• enhanced Rev-Rec capability with auditable software delivery confirmation
© 2017 Viavi Solutions, Inc. 21
Standardising Licensing will enable:
• common standardized processes for licensing• increased automation to reduce touch points
Scalability of Operations for Software
• common license mechanisms• re-use of licensing code modules
New Product Development Efficiency
• simplified licensing process• breadth of licensing types to meet market needs• accommodate e-commerce• reduction in revenue leaks due to licensing gaps
Increase Revenue Opportunities
Key questions to evaluate
Evaluation for Digital Transformation
Topic We will answer these questions
Assess Competitive & Market Environment
Digital Maturity Where are you on the digital maturity curve relative to the standard in your industry?
Scale of Transformation Will digital playing a support / enabling role, or will it transform the fundamentals of your business?
Competitive Landscape How rapidly are your competitors embracing digital? How will they respond to your transformation?
Analyze Customer Needs
Digital SegmentsCan digital help you identify benefits that some segments perceive as exceptionally valuable, and for which they have a higher willingness-to-pay than other segments?
Digital Uptake Can digital play a part in expanding new-customer acquisition? Does your offering have viral potential?
Data-DrivenInsights Will expanded data improve (a) retention, (b) cross-sell, (c) upsell, (d) identification of new needs?
Assess Org Capabilities
ResourcePlanning
What is your level of organizational readiness? Are there sufficient available resources to successfullydevelop and implement a digital solution?
Digital Goals Alignment
GoalPrioritization
Is your organization internally aligned around the same set of digital goals? Are all members of your organization invested in the success of the digital solution, and prioritized it sufficiently?
Digital Roadmap
Allocating for Digital How will digital transform your roadmap? What planned initiatives will reinforce your digital evolution?
Developing KPIs What metrics do you need to define and monitor the success of your digital program?
1
2
3
5
4
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