The consumer packaged goods (CPG) industry is in the midst of a major transformation driven by changes in technology and dramatic shifts in consumer preferences. At the same time, the pressure to keep costs low and operate more efficiently has never been so intense. CIOs in the CPG industry need to successfully navigate these turbulent forces to position IT as an enabler of business value within their companies.
To understand how the IT function in CPG companies is responding to the ongoing technology and industry transformation, The Boston Consulting Group and the Grocery Manufacturers Association (GMA) conducted extensive benchmarking on a variety of strategic IT topics. This report is based on a survey of 37 CPG manufacturers in the U.S. and Europe, conducted in the first half of 2015, and supplemented by interviews with more than 15 CIOs of participating companies. It also draws on BCG’s experience working with many of the leading CPG manufacturers and retailers globally.
Enquanto a pesquisa foi conduzida em colaboração por BCG e GMA, o BCG é totalmente responsável por todas as análises, conclusões e recomendações. Mas as operações diárias, tecnologias legado onerosas, escassez de talentos e um foco implacável nos custos são obstáculos significativos. O que os líderes de inovação estão fazendo que outros não são?
Many CIOs aspire to drive innovation, shape digital and e-commerce business decisions, and play a pivotal role in the success of the business overall. But day-to-day operations, burdensome legacy technologies, talent shortages, and a relentless focus on costs are significant hindrances.
Despite these challenges, a number of CPG companies have been able to make tangible progress on their innovation agenda. What are the innovation leaders doing that others are not?
Enablers of IT Innovation
BCG’s Navegando pelo novo mundo em bens embalados de consumidores Identificaram três características dos líderes de inovação de TI na indústria de CPG: eles normalmente executam orçamentos amplamente escovados de TI que vão muito além da infraestrutura e aplicações principais de TI, experimentam uma ampla variedade de novas tecnologias e investem fortemente em recursos habilitados para TI. A análise mostrou gastos médios de 1,8 % das receitas, que é 30 pontos base mais altos que os gastos de operadores conservadores, que é de 1,5 %. Embora essa diferença possa ser atribuída em parte a variações de escopo, a realidade é que a inovação de TI não é gratuita. Os CIOs que buscam inovar a necessidade de aumentar seus orçamentos de TI ou remodelar os gastos para criar os fundos necessários. Os líderes de inovação de TI da CPG fornecem a maior parte do financiamento para uma série de recursos avançados de tecnologia, como sites de consumidores e aplicativos móveis, tecnologia de comércio eletrônico e gerenciamento de conteúdo,
Consequently, IT innovation leaders spend more on IT. The analysis showed median spending of 1.8 percent of revenues on IT, which is 30 basis points higher than the spending of conservative operators, which is 1.5 percent. While that difference can be attributed partly to variations in scope, the reality is that IT innovation is not free. CIOs looking to innovate need to either increase their IT budgets or reshape spending to carve out the necessary funds.
Broadly Scoped IT Budgets. Innovation requires the ability to back new-technology deployments with sufficient funding to support development, experimentation, and company-wide adoption. CPG IT innovation leaders provide the lion’s share of funding for a raft of advanced technology capabilities, such as consumer websites and mobile apps, e-commerce technology and content management, Próxima geração TI para empresas de bens embalados de consumidores e análise de dados. (Consulte o Anexo 1.)
Experimentation with a Wide Variety of New Technologies. CPG innovation leaders are prolific users of new application-development frameworks and tools, new software technologies, and cloud-based IT infrastructure. Nearly two-thirds of innovation leaders in the 2015 survey use responsive Web design (an approach that provides an optimal user experience regardless of screen size), and nearly one-third are deploying nonrelational databases to replace the traditional tabular (or relational) databases used since 1979. A high proportion of innovation leaders are also becoming more nimble by moving from code-heavy, monolithic applications to small, self-contained “microservices.”
Investimento em todo o espectro de processos de negócios. Os líderes de inovação relataram consistentemente altos níveis de investimento de TI em áreas críticas de negócios, como cadeia de suprimentos, finanças e marketing. (Veja o Anexo 2.) Em outras palavras, em vez de simplesmente se concentrar nas tendências do dia - como marketing e gerenciamento de informações - os líderes de innovação investem em geral. Acreditamos que essa abordagem é mais eficaz porque as melhores inovações habilitadas para a tecnologia exigem integração em várias funções de negócios. O sucesso no comércio eletrônico, por exemplo, requer uma transformação tecnológica que vai muito além do site para permitir o planejamento e a fabricação complexos da demanda, a reconfiguração de cadeias de suprimentos e logística, atualizações para sistemas financeiros e melhorias no atendimento ao cliente. CIO Survey participants rated their level of investment in IT projects across various business processes on a qualitative “high, medium, low” scale. Innovation leaders consistently reported high IT investment levels in business-critical areas, such as supply chain, finance, and marketing. (See Exhibit 2.) In other words, rather than simply focusing on the trends of the day—such as marketing and information management—innovation leaders invest across the board. We believe this approach is more effective because the best technology-enabled innovations require integration across multiple business functions. Success at e-commerce, for instance, requires a technology transformation that goes well beyond the website to enable complex demand planning and manufacturing, reconfiguration of supply chains and logistics, updates to financial systems, and improvements to customer service.
Innovation’s Starting Point: The CIO
CIOs deve cuidar da cadência diária de planejamento, orçamento, gerenciamento de operações diárias, incidentes de manuseio e aprimoramento de incêndios - todos os negócios são de costume. As preocupações diárias podem preencher a cada hora no trabalho. Mas com o passar do tempo, os CIOs podem achar que estão pisando água - ou ficando para trás. Isso é especialmente verdadeiro na indústria de CPG, onde os orçamentos de TI tendem a ser mais restritos do que em outros setores. Portanto, cabe ao CIO estabelecer uma agenda de inovação para afastar a estagnação e enfrentar os desafios de uma indústria em mudança.
Surpreendentemente, poucas práticas de innovatação de TI estão em uso pelas empresas de CPG. Embora muitas empresas tenham estabelecido laboratórios de inovação em tecnologia e executam pilotos com fornecedores, a maioria das práticas de inovação é muito subutilizada. (Consulte Anexo 3.)
While some innovation efforts require corporate-level commitment and investment, a number of low-cost options are possible:
- Join venture capital (VC) advisory boards. Most VC funds are eager to connect their portfolio companies with prospective enterprise customers. CIOs willing to invest time are usually well rewarded with early access to cutting-edge technologies.
- Engage with technology vendors. Technology vendors have many active R&D and innovation projects. CIOs who visit select companies two to four times each year can get a pulse check on emerging technologies and trends.
- Ask existing suppliers to develop proofs of concept and demos. One participant in the 2015 survey identified a number of technology-enabled opportunities that could enhance the business. One idea was to place sensors on beverage dispensers at customer sites to track consumption. By doing so, the company could monitor inventory (to prevent stockouts, for example) as well as track consumption to better understand consumer behavior and improve marketing tactics. The CIO then asked one of the company’s development vendors to cofund the development of working prototypes to show at a board meeting.
- Deliver an ongoing series of quick wins. To gain momentum and establish credibility, aim to launch a portfolio of technology solutions that deliver business impact in two quarters or less. Software-as-a-service-based solutions or mobile apps needing limited data integration are two examples of the feasibility of rapid execution.
Such moves can help CIOs build credibility with the business and establish the case for innovation funding and expansion of IT’s scope. (While there are no guarantees in the life of a CIO, the sidebar “High-Tech Spin-Off from a CPG Company” shows how far an IT-driven innovation experiment can go.)
HIGH-TECH SPIN-OFF FROM A CPG COMPANY
McCormick & Company is one of the world’s leading manufacturers of spices, seasoning mixes, and condiments. Over the years, the company’s R&D function has created a large data library of ingredients, products, and recipes and their more than 16,000 associated aroma chemicals.
In 2011, as part of an effort to drive growth, CIO Jerry Wolfe decided to green-light a tool that could recommend specific McCormick products to consumers. The development team worked with external technology partners to algorithmically map McCormick’s food-data library to create a unique “fingerprint” for every food item. Each resulting FlavorPrint is mapped to 33 flavors and 17 textures that characterize every food item. Each person’s taste preferences can also be represented by his or her unique FlavorPrint, which consists of familiar terms such as peppery, nutty, and buttery and is created by asking users to like or dislike a series of food images displayed in an online app. Consumers with FlavorPrint profiles can then get recommendations that match their taste profiles.
In 2012, the company launched FlavorPrint in a new flagship store near its historic spice factory in Baltimore’s Inner Harbor. In 2013, McCormick put the FlavorPrint recommendation-app online, gained 100,000 beta users, and saw a revenue increase of 4.9 percent. As a supplier of flavors to other food companies, McCormick realized that the technology could be sold as a stand-alone product; consequently, in December 2014, it spun off the start-up Vivanda. Jerry Wolfe became CEO and continues to lead the Companhia hoje. Saiba mais sobre a história do McCormick em “1
NOTE
1. Learn more about the McCormick story in “Tech Spin-Off from Spice Maker McCormick Puts CIO in the CEO Seat,” Wall Street Journal, April 1, 2015.
CIOs given a mandate to innovate are operating with a larger scope, experimenting with a wide range of technologies and strategies, and investing in capabilities that can satisfy customer expectations and meet internal enterprise needs. By embracing technological innovation, forwarding-thinking CIOs are helping their companies stay agile, adapt to change, and set a course for success.