FT SPECIAL REPORT The Connected Business

Wednesday January 29 2014 www.ft.com/reports | @ftreports

Inside »

Tricky customers Understanding data about consumers will be the next big differentiator Page 2

Lack of clarity on paybacks Normal metrics ‘don’t always apply’ to digital initiatives Page 2

Cloud cover Hybrid approach gives companies greater control over processes

Bold is beautiful: analysts say organisations will not maximise the benefits of their digital strategies unless they think holistically and avoid a piecemeal approach. See Page 2 Oivind Hovland Page 3

Takeover is snug fit for Wolverine Cloud helps US shoemaker handle Young, gifted – and digitally savvy $1bn purchase Page 3

Trends for 2014 rate policy that restricted use of Jive to make internal communica- vacy. “If you are working on an M&A just another set of software tools. IT departments have their own mobile devices at work. tions more efficient. deal, you can create a group on the When done right, they will flatten Mobility and Some 70 per cent said they had used a “In many cases, adoption is driven platform that is entirely private, that organisational structures and open up analytics will be long been wary of the personal account on a cloud storage by the fact that a younger generation you would never know existed unless the way companies communicate.” under-30s but are provider such as Dropbox for work is coming in. It is a generation that you were invited to join it,” says Mr These are big claims which may or high on corporate purposes. does not use email in their personal Antebi. may not come true. But, at least, IT spending plans “I don’t think there’s one job where lives; you can’t just tell them to go He is convinced that social software some of the friction between young finding ways to adapt, I haven’t bent the rules quite far to be use Outlook,” says Oudi Antebi, sen- will bring profound changes to the “digerati” and their corporate IT gate- Page 4 more efficient,” say Max Tatton- ior vice-president of products at Jive. ways companies operate. “This is not keepers could be starting to ease. writes Maija Palmer Brown, an independent communica- “If you are trying to recruit in large tions professional in his late 20s. numbers it becomes a key component It is not just that younger employ- in attracting people. People do ask sk someone under the age of ees – who cannot remember a time what tools they will use to get their 30 about corporate IT and before the internet and mobile phones work done.” you get a big sigh. – want different gadgets. Their whole Jive’s own research suggests that, “It was a big shock,” says approach to problem-solving is differ- apart from pleasing young staff mem- Bradley Tubb, 28 and a sen- ent, says Olivier Binse, head of advi- bers, companies adopting social col- Aior account director at Clarity PR. “I sory at Deloitte’s Digital business in laboration tools obtain a 15 per cent was a Mac user and when I started the UK. boost in productivity. my first job it was hard to go from a “If you asked a group of young Security concerns over the new user-friendly interface to working graduates 10 years ago to solve a ways of working remain an issue for with something clunky like Microsoft particular problem they would have companies, but IT departments are XP. done a lot of research and analysis. starting to respond in ways that go “One company I worked for gave us Now, they just post the problem beyond issuing a blanket ban. corporate iPhones, which sounds on a social network and see what “Most companies now allow some great, but as I had my own already I suggestions emerge,” he says. form of bring your own device,” says ended up transferring my work emails Siân John, UK and Ireland director of to my personal phone and the corpo- security strategy at Symantec, a secu- rate one just kept getting left, rity software group. uncharged, at the bottom of my bag,” ‘I don’t think there’s one “And social media use is becoming he says. job where I haven’t bent more mainstream in companies. The Mr Tubb also admits to being one of IT manager, nervous about sensitive the many people of his age who have the rules quite far to corporate data leaking from social downloaded programmes that the IT networks and unsecured personal team have not sanctioned and trans- be more efficient’ devices, can be reassured with a new ferred corporate files on and off the set of management tools.” cloud to get his job done more effi- Ms John says that, rather than issu- ciently. Sometimes, says Mr Binse, senior ing a ban on cloud storage accounts – “Sometimes I would go and work in managers are uncomfortable with which would be flouted in any case – a café, and rather than take my heavy the public approach and worry about companies can build in controls that work laptop I would just transfer the reputational damage. But, he says: stop any truly sensitive data from documents I was working on to my “Sometimes it is a brilliant strategy – being transferred out of the corporate own device using Google Drive.” what comes out is much better than a network. These days, Mr Tubb is much hap- whole research programme might “Quite often, employees don’t real- pier with corporate IT – his employers have produced.” ise what might be sensitive – such as at Clarity allow staff to bring in their Organisations, from Macmillan, the mentioning that they are working at own devices. But his early work expe- cancer charity, to KLM, the Dutch air- customer site X. We can put in place riences are typical of a growing rift line, have all tapped into the social blocks based on certain keywords,” between corporate IT departments media skills of younger employees, says Ms John. Data being uploaded to and young employees who have getting them to staff official social cloud storage accounts such as Drop- grown up using smartphones and the media accounts and talk to customers box can also be encrypted, and internet. in a new way. Symantec offers Norton Zone, a More than half of young employees A number of companies, including secure cloud storage service that surveyed by Fortinet, the IT security PwC, Vodafone and DHL,arealso includes encryption as standard. company, at the end of last year said installing internal social media plat- Corporate social media platforms, they were willing to break any corpo- forms such as Chatter, Yammer and too, are built with many layers of pri- CIOs must face up to ‘off-radar’ spending on online services

enabling both marketing profound sense among how easy it is to launch Budgets chiefs and the newfangled many board members that projects using online serv- digital supremos to claim their company is not max- ices and pay for them with Co-operation is vital greater influence over tech- imising the returns on its their company credit card. as decisions on what nology budgets. investment in technology. Often characterised as By 2020, almost 90 per “We’re not saying that “shadow IT”, these initia- to buy become cent of technology spending CIOs are dying out,” says tives underpin Mr Willis’ dispersed, writes will originate outside IT prediction that technology departments, according to budgets will move away Michael Dempsey a forecast last year by Marketing staff are from information chiefs. Gartner, the IT research finding it easy to VMware, a US cloud soft- firm. The explosion in ware house, says many Pity the poor chief informa- online sales and marketing pay for technology CIOs have recognised the tion officer. Having made it is driving this trend. via their company benefits of what it terms to the boardroom in many David Willis, a senior ana- “off-radar” IT spending. companies, CIOs now find lyst at Gartner, is confident credit cards More than a third of the their traditional control marketing chiefs will be the 1,500 European IT decision over IT spending threatened lead spenders on IT within makers VMware polled last by chief marketing officers a few years. They stand Mr Willis, “but they will year suspected their col- and – more recently – chief together with their digital lose influence if they focus leagues had bought cloud digital officers. counterparts, whose role only on operational issues.” services without seeking But they will have to promotes digital strategy The increasing sophistica- permission from the IT get used to it. The internet and reflects “the frustration tion of cloud computing department. has transformed customer- that boards have at getting services has brought this Marketing and advertis- facing businesses, introduc- things done in IT”, he says. debate to the fore. Market- ing new sales channels and This shift owes a lot to a ing staff have discovered Continued on Page 2 2 ★ FINANCIAL TIMES WEDNESDAY JANUARY 29 2014 The Connected Business Experts urge boardrooms to be bolder

the digitisation of customer- Digital strategies facing channels at the expense of back-end infra- Many companies are structure and processes. failing to capture There’s little business value in launching a new mobile the full benefits of app if it requires too many their investments, manual processes and hand- offs at the back office to writes Paul Taylor work smoothly.” Not only may a narrow focus minimise the benefits A piecemeal approach to of digitisation, it may also digitisation misses opportu- leave organisations vulnera- nities to gain maximum ble to more agile new advantage from digital entrants. investments, according to This means companies two McKinsey consultants. will need to compete with “Tools such as big-data unprecedented speed and analytics, apps, workflow agility, says Hung LeHong, systems, and cloud plat- research vice-president and forms are too often applied Gartner fellow. selectively by businesses in For example, large hotel narrow pockets of their chains such as Starwood, organisation, particularly in Hilton, and Hyatt first had Just the ticket: at rock concerts and other events, Ticketmaster customers can choose seats based on where their friends and family on Facebook will be sitting Alamy sales and marketing,” say to compete against the ini- Tunde Olanrewaju, a princi- tial wave of digital business pal in the consultancy’s models from sites such as London office, and Paul Hotels.com. Willmott, a director. Now, these long estab- Insights about big data, lished groups must compete for example, can be used against new digital business not only to enhance cus- models created by compa- Data can be source of power tomer targeting and adjust nies such as Airbnb, the pricing in real time, but room rental site. also for better forecasting of To reap the real benefits operational-capacity needs, of digitisation, consultants which boosts asset and agree, business and IT lead- Competitive advantage Unlocking information on customers is the key, writes Jessica Twentyman resource utilisation. ers will need to adopt a The McKinsey consult- more holistic view of their – ants say: “Most enterprise and their competitors’ – leaders share an important operations. n an increasingly digital world, challenge: how to get every online interaction that a beyond the small share of company has with a customer ‘It’s complicated’ Paybacks are uncharted territory where traditional metrics don’t always apply the prize they are capturing brings it some more data about today by looking for impact ‘Back-office that individual, from basic demo- across the whole value digitisation can Igraphics to more in-depth information If business leaders were asked to investing in digital initiatives: about has since been adopted more confidence to propose the best chain.” about their purchasing habits. assign a Facebook-style status to half of the companies surveyed generally. ideas, regardless of the impact For many companies, dig- generate as much Those data can be a powerful source their relationship with digital said that they create a business This technique, for example, is these may have on deeply ital transformation projects of competitive advantage, helping a transformation, it would probably case for these programmes, but often adopted as a necessity by entrenched corporate behaviours have focused on online as 30 per cent company better understand what, read: “It’s complicated.” many of them are “guilty of fuzzy start-ups that disrupt established and beliefs. sales, social networking and annual cost savings when and how to sell the customer That is the view of researchers math[s],” the report finds. markets with new products and The approach is very resource- mobile applications. more goods or services, if only it can from MIT Sloan Management But should company leaders be new ways of interacting with efficient, adds Mr Buvat at But a year-long research for banks’ take full advantage of the information Review, a US-based business held back by the lack of a customers, according to James Capgemini. Projects that fail to project by McKinsey found it has. journal, and Capgemini, an IT watertight business case McQuivey, an analyst at Forrester thrive, or lose their way, can be the greatest impact on a As Angela Ahrendts, outgoing chief consultancy, who last year co- accompanied by solid growth Research and author of Digital killed off quickly, leaving resources company’s profitability may One further issue for executive of Burberry and driving authored a report about the digital projections and return on Disruption: Unleashing the Next for more promising ideas. come from cost savings and boardrooms is that big data force behind much of the brand’s dig- ambitions of more than 1,550 investment calculations? Wave of Innovation. “Based on what works and what changes beyond the inter- are not just structured and ital transformation, said last year: executives worldwide. Not necessarily, says Jerome He notes, however, that it is doesn’t, an organisation’s road face with customers. transactional but also “Consumer data will be the biggest On the one hand, bosses Buvat, global head of research at also an approach with which older, map for digital transformation The study suggested that, include unstructured ele- differentiator in the next two to three recognise the importance of digital Capgemini Consulting. Digital more traditional companies often becomes clearer quite while digital sales could ments such as intentions, years. Whoever unlocks the reams of transformation: 78 per cent of transformation projects “take frequently struggle. rapidly, without too much time or improve profits by an aver- thoughts and images. data and uses them strategically will those surveyed said it would companies into uncharted territory, Yet Mr McQuivey has also seen money being spent.” age of 20 per cent over the This mixture can over- win.” become critical to their where traditional payback metrics significant successes among older This should make digital next five years, cost reduc- whelm executives but also The trouble is, relatively few organi- organisation within the next two don’t always apply”. companies that are prepared to transformation a more manageable tions could average 36 per offers big opportunities, sations have achieved this yet, says years. Instead, he says, smart throw away the research and prospect for companies. cent. says Jason Ward, a senior Jason Gordon, a partner in the analyt- On the other hand, there is a companies take small steps development rulebook and think In any case, it is not as if “A too narrow focus UK executive at EMC, the ics team at Deloitte, the management lack of clarity about the pay-off forwards, via pilot and “skunk differently. standing on the sidelines until a on distribution channels software group. consultancy. they can expect to see from works” projects that focus on “Small, independent teams are rock-solid business case becomes means organisations are He cites the example of “It’s partly the newness of the prob- identifying “quick wins” for further critical to digital transformation clear is a more sensible option – getting only a small share Germany’s MAN Trucks, lem and partly its magnitude: there’s James investment. projects, because they need to be at least, not according to the of the full value that digital which has been able to just a lot of data pouring in, through McQuivey: A skunk works project is one nimble and they have to be free MIT/Capgemini report. transformation can pro- evolve its business to pro- a wide range of mostly very new has seen that is developed by a small, to pursue entirely new thinking,” “The connected world creates a vide,” the report concluded. vide a fleet management channels,” he says. successes autonomous unit with a remit to he says. digital imperative for companies,” McKinsey’s findings are service to operators “The result is that most companies at older innovate, often to tight deadlines When these small teams have it says. “They must succeed in echoed in research under- through the analysis of data have barely scratched the surface of companies and on a limited budget. direct support and encouragement creating transformation through taken in the financial serv- collected from cabs. where they need to get to in terms of The term originated at Lockheed from their organisations’ leaders, technology, or they’ll face ices sector by Capgemini. Many organisations have being able to analyse customer data, Martin, the US aerospace he adds, their independent status destruction at the hands of their “Digitisation can create struggled with similar and understand the customer better company, in the 1940s, as – which lends them some distance competitors that do.” significant cost-saving projects. As consultants at as a result, although there is a wide- engineers and pilots worked to from day-to-day organisational opportunities for organisa- AT Kearney note, the true spread acknowledgment that this refine jet fighter technology, but politics – gives them the Jessica Twentyman tions within the financial value of digitisation comes needs to change,” he says. industry,” says Jerome from the ability to collect An even bigger stumbling block, he Buvat, head of Capgemini and retain for analysis says, lies in gathering customer data Consulting’s Digital Trans- every morsel of information arriving through multiple different insights. “For us, it’s about having them avoid their insufferable cousin, There is an important consequence formation Research Insti- on customers. touch points – the web, mobile, social closer conversations with patients and by choosing a seat as far away from of this increasing focus on customer tute. But this can produce “an and so on – and being able to con- physicians, from offering them health- them as possible. data and customer experience, says “Our research found that overwhelming mess of data solidate them to create a single view care guidance to getting their partici- Either way, the customer benefits David Mathison, a New York-based back-office digitisation can with no insight”, they say. of an individual across multiple chan- pation in clinical studies.” from Ticketmaster’s smart and cus- executive search specialist and generate as much as 30 per “Those able to attract and nels. “We’ve spent a lot of time making tomer-friendly use of social data from founder of the CDO Club, a network- cent annual cost savings for retain the right analysts “This is perhaps where the greatest sure that we collect the data that Facebook. ing organisation for chief digital offic- banks.” can transform the moun- potential lies for improving the cus- really matter and, from the insights “Online ticket sellers often come ers and others in related roles. But, he adds, “most banks tain of customer data into tomer experience,” he says. that data give us, we come up with under fire for hidden fees and near- An understanding of data analysis are falling into a common decisions and strategies for “Today’s connected consumer will actions that will make a strategic dif- monopoly of the industry, but disrup- techniques and approaches is now a trap. They are focusing on executives.” interact with a business through mul- ference to us and our audiences – data tive innovations like this give the must-have skill for anyone with ambi- tiple channels, but to them, it’s all the and actions that keep us nimble and company a marked point of difference tions to lead their company’s digital same brand. A single view of that highly relevant.” and keep customers coming back,” transformation strategy, he says. customer can help the brand deliver James Whatley, social media direc- says Mr Whatley. “There are plenty of data out there a highly personalised experience, tor at Ogilvy & Mather, an advertising As yet, not many organisations are and not enough insight – and that’s regardless of the channel.” company, cites Ticketmaster, the using data to transform the customer broadly true across companies, non- Despite the challenges involved, online ticket sales company, as experience for the better – so those profit organisations and government some companies are making signifi- another organisation making signifi- that do have a real opportunity to agencies,” says Mr Mathison. cant progress, but it requires a highly ‘There are cant progress in using data to stand out, says Phil Dearson, head of That is not to say that those in focused, selective approach to the improve the customer experience. strategy and user experience at Tribal charge of starting new digital chan- data that are collected, how they are plenty of Since 2011, it has allowed its custom- Worldwide London, another advertis- nels need to be highly technical, “big analysed and the actions they prompt, data out ers to select seats for events based on ing agency. data” specialists, he stresses: they typ- says AstraZeneca’s Mark Mont- where their friends and family on “Those that are [can] take what ically have an insights and analytics gomery. there and Facebook will be sitting. they know about us, in order to antici- team to provide that expertise. “We don’t just collect data for the The smart thing about this is that it pate what we might want, rather than But they must have a very firm sake of it,” says Mr Montgomery, who not enough works both ways, he points out: as carpet-bombing us with options. Alter- grasp of what their data are telling is the pharmaceutical company’s glo- insight’ well as enabling a customer to sit natively, they can give us a price tai- them, “because, after all, that’s where bal director for digital and customer near their best friend, it can also help lored to our value to them,” he says. competitive advantage really lies”.

CIOs must face up to ‘off-radar’ IT spending Contributors »

Continued from Page 1 ing to position themselves their colleagues while tries and has ambitious CIO’s role at Starbucks has Maija Palmer For advertising details, as honest brokers. Accept- encouraging them to let IT expansion plans, so Mr been downgraded should Social media journalist contact: James Aylott, tel ing departments were the ing the appetite for popular staff assess proposals and Brotman is concerned that note that Mr Garner has 760 +44 (0)20 7873 3392, email prime culprits, but most services, they are facilitat- offer advice. Co-operation projects such as Square staff answering to him Paul Taylor [email protected], or information chiefs have ing the technology wishes and co-ordination are cru- Wallet, its mobile payment while Mr Brotman’s office US business technology and contact your usual FT reacted to this with equa- of colleagues while watch- cial, offering a way for app, work consistently runs a team of 110. telecoms correspondent representative. nimity. ing out for security vulnera- information chiefs to main- across languages and cul- But a third of the 100 IT In fact, 72 per cent of bilities or instances of com- tain influence while accept- tures. But his brief is wide, projects running at Star- Jane Bird, respondents regarded such pany rules being broken. ing that total control over extending to matters which bucks relate to customers Michael Dempsey, All FT Reports are available off-radar spending as benefi- Lee James, head of IT IT spending is a thing of the would never trouble an or to integration with part- Paul Solman, on FT.com at ft.com/reports cial. They recognised that strategy at Betfair, the past. information chief, such as ners, suppliers and acquisi- Jessica Twentyman colleagues would opt for online betting exchange, In light of these trends, in-store entertainment. tions such as the recent Freelance writers Follow us on Twitter at: online data storage and reports to CIO Michael global brands are revising The chain’s growing rela- $620m purchase of Teavana, @ftreports email hosting because of Bischoff and says any their chain of command. tionship with customers via the US tea-shop chain. Andrew Baxter the sheer convenience of attempt to block the cloud When the CIO of Starbucks, mobile apps and social Adam Brotman of Starbucks The CDO’s job is to put a Commissioning Editor the cloud. However, IT pro- spending craze would stifle the US coffee bar chain, left media is Mr Brotman’s has a legal background distinct Starbucks stamp on All editorial content in this fessionals do worry about productivity. “Off-radar in 2012, it seized the oppor- focus, and he reports to the online aspect of all Liz Durno supplement is produced by the potential security risk cloud spending is inevitable tunity to create a digital Howard Schultz, chief exec- these relationships. Sub-editor the FT. of this covert spending, as in almost any organisation; chief too. utive. Mr Brotman’s office infrastructure that keeps For Starbucks, this is sim- it may open unauthorised what matters is how the IT Adam Brotman, CDO and is next door to CIO Curt the corporation ticking ply a question of keeping IT Steve Bird Our advertisers have no routes into corporate data. department responds.” a lawyer by training, has a Garner and they and their over, while reporting to connected to the rest of the Design Editor influence over, or prior sight The unstoppable momen- Mr James says CIOs heady mix of digital ven- teams work closely Troy Alstead, chief finan- business. Ensuring a profit- of, articles or online material tum behind cloud IT spend- should welcome online tures to manage. The com- together. Mr Garner sticks cial officer. able digital identity is a Andy Mears in this or any other special ing means CIOs are learn- technology purchases by pany operates in 63 coun- to providing the technology Anyone who thinks the task for CIO and CDO alike. Picture Editor report. FINANCIAL TIMES WEDNESDAY JANUARY 29 2014 ★ 3 The Connected Business

matching business process services “The consumer journey and engage- and an integrated PaaS (platform as a ment has improved and there is more service), a hosting environment for customer satisfaction. Integration of Companies take users’ applications, says Gartner. chat and video are underpinned by James Petter, UK managing director the cloud, and customer relationship of EMC, the data storage and software management systems and digital group, says: “Organisations move to social platforms can be deployed the cloud for a number of reasons, but much faster and [more] effectively.” to the cloud for they most often relate to agility, con- One example is the cloud’s role in trol and efficiency. They may be using enabling data analytics, says Mr King. a private cloud on-premise, an off- “The cloud provides the analytics that premise private cloud or they may put are helping demand planners get the some data into a hybrid cloud. best out of their forecasts,” he says. “Some may even be going to a fully “It allows easy access to data to help flexible solutions public cloud. But they want to retain customers improve the bottom line by information in-house and have the improving transport solutions.” flexibility of the cloud.” The cloud also has an important Yet Gregor Petri, a research director role in cutting costs. “We habitually at Gartner, points out that businesses see at least 20 per cent savings when are not simply transferring existing services run on the cloud, sometimes systems to the cloud. “People are not much higher depending on the situa- migrating services, but doing things tion,” says Mr Sepple. that weren’t possible before, such as However, says Mr Petter at EMC: in social media, mobile and big data “It’s not just about cost but about Computing Hybrid deployments give greater spaces.” scale – as an organisation grows, the One example is in the supply chain. cloud allows it to gain skills and serv- control over processes, writes Paul Solman Efficiency: the cloud is playing a significant role in the supply chain Joe King, senior vice-president at ices.” JDA, the supply chain software group, This point is taken up by Gartner’s says: “More than just hosting serv- Mr Petri. “Very often, it is not even n just a few years, the cloud has ning systems such as email services, thing that can sometimes hold them ments are low but aspirations are ices, the cloud is ensuring availability costs but about being able to focus on transformed consumers’ behav- human resources and administrative back is concern about security.” high.” and performance, protecting data and your difference,” he says. iour. Services such as Google processes via the cloud, as well as Nearly half of large enterprises will Gartner predicts that between 2013 helping businesses with change man- The form of outsourcing that the Drive, Amazon’s Cloud Drive, data storage and back-up. Experts be using the so-called hybrid cloud, and 2016, $677bn (£412bn) will be spent agement by deploying functions and cloud provides can be much more tar- Apple’s iCloud and Dropbox hold believe the next few years will see a which combines private and public on cloud services worldwide. There lessening disruption. geted than traditional outsourcing, he Imany people’s personal data, storing sharp increase in uptake. cloud services, by the end of 2017, will be strong demand for all types of “The cloud is playing a significant believes. everything from documents and pho- Jack Sepple, senior managing direc- according to Gartner, a technology services, but BPaaS (business process role in the whole spectrum of the sup- “Business processes can be out- tos to music and video and giving tor of infrastructure and cloud at research company. as a service), where processes such as ply chain, from deciding to buy to the sourced at a much more granular access from almost anywhere. Accenture, the consultancy, says: “As “In the past three years, private payroll and ecommerce are run on the suppliers, distributors and retailers.” level – you outsource one by one and Businesses, by contrast, have been recently as 2012, I think there was still cloud computing has moved from an cloud, will be the second largest mar- In fact, the cloud is allowing busi- pay for them on a transaction-by- slower to embrace the public cloud some education needed around how to aspiration to a tentative reality for ket segment after cloud advertising. nesses to improve all aspects of the transaction basis. The processes can amid concerns over access and secu- leverage the cloud. nearly half of large enterprises,” the And by 2017, more than half of large customer experience, adds Accen- be outsourced to highly specialised rity. “But now, most organisations are company said in a report last year. providers of SaaS (software as a serv- ture’s Mr Sepple. “It is offering new companies who might carry out these Yet the signs are that companies’ no longer looking at ‘Should I use the “Hybrid cloud computing is at the ice), where applications are run on ways of holding discussions with cus- functions for 100 companies, so there use of cloud services has begun to cloud?’ but ‘How can I use it?’. They same place today that private cloud the cloud rather than being installed tomers and leading to better collabo- is a great deal of expertise and gains expand, with growing numbers run- understand the possibilities. The one was three years ago; actual deploy- on individual computers, will offer ration,” he says. of scale.” Shoe supply chain has sole version of truth

Case study documents into electronic data communicated to Wolverine Worldwide suppliers, customers and partners online. “It wasn’t Cloud hub connects called the ‘cloud’ then,” says Ms Slater. company to suppliers The online, electronic and customers, approach helped standardise and simplify writes Jane Bird data across the organisation. “We’re not a technology company, but When WolverineWorldwide, we want to be innovative the Michigan-based shoe in our use of technology,” and clothing group, says Ms Slater. acquired four brands in Wolverine has a hub on October 2012, its turnover GT Nexus, a cloud-based doubled to $2.6bn. The global trade “network of acquisition could have networks” that connects been a huge administrative companies to their headache, says Dee Slater, suppliers, customers and chief information officer partners. and vice-president of Information such as supply chain. costs, volumes and A cloud service made the dispatch and delivery dates process so simple that the can be uploaded and transition was seamless, shared on the hub by although it had to handle partners, such as factories twice as many transactions and wholesalers. Buyers overnight. know where their goods Wolverine sources more are, and suppliers where than 100m pairs of shoes a their payment stands. year from 110 factories in “There is one set of data 20 countries. Its products, and all partners in the which include Keds and supply chain, logistics and Hush Puppies, are sold via finance can access this websites and retailers single version of the throughout the world. truth,” says Ms Slater. “Acquiring a business And because everything worth more than $1bn is tracked, Wolverine can involved thousands of focus on the areas where active purchase orders, goods are ahead of or behind schedule. Wolverine’s Further enhancements system can will keep supply chain respond partners informed about quickly to work in progress, such as changes in whether raw materials fashion have arrived or goods are in the packaging phase. This makes it easier to masses of goods in respond to changes in shipment, and payment fashion. transactions in process,” “If a style or colour Ms Slater says. takes off, we will be better “We didn’t lose a single able to expedite it if we [purchase order], no know what stage the factories were unpaid, and factory floor is at,” says there was no time at Ms Slater. which we didn’t know Is she worried about data where goods were.” Full on the cloud being integration was complete vulnerable to security within a year. breaches? “Anything online Scalability and ease of could be subject to integrating acquisitions are hackers, and that worries not the only advantages of me,” she says. “It’s my job using a cloud service, she to be paranoid.” says. Other benefits are Organisations ought to access to best practice in think hard before insisting activities ranging from that existing cloud services security and compliance to be customised and adapted process innovation and the for them, she advises. ability to respond quickly “You should question to market changes. why you want to do Wolverine’s use of the something differently from cloud dates to 2001, when it the rest of the industry, began transforming labour- because it probably means intensive paper-based you will miss out on the purchase orders, credit benefits of the cloud, now notes and import/export or in the future.”

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Cloud is silver lining for Fidor We could never have done it all ourselves, says online bank chief Matthias Kröner www.ft.com/reports 4 ★ FINANCIAL TIMES WEDNESDAY JANUARY 29 2014 The Connected Business

computational modelling techniques,” he says. Mr Curran also identifies socially Analytics and mobility enabled business processes as a big business technology trend. “Business processes across the enterprise will deeply entangle social and community capabilities to enable a new genera- tion of connected employees,” he says. among big 2014 trends In addition, he says that, since con- sumers are using their mobile digital devices to monitor their health, check their bank accounts and pay their bills, many companies will need to develop a mobile customer engage- ment strategy. Among corporate IT leaders, two Corporate IT Paul Taylor on where CIOs will be spending their money main technology priorities emerge, according to Gartner’s recent CIO Agenda 2014 survey: renovating core loud computing, data ana- and sensors. “This transformation global IT market will grow 3.1 per IT processes and exploiting new tech- lytics, mobility and socially will change the way people live, work cent to $3.8tn this year, Gartner pre- nologies and trends. enabled business processes and play.” dicts. It says spending on devices, “The core of enterprise IT – infra- are reshaping corporate IT, In the meantime, enterprise soft- including PCs, laptops, mobile phones structure, applications such as ERP, while the emergence of ware is expected to be the strongest and tablets, will grow 4.3 per cent in information and sourcing – was built Cmachine-to-machine communications growth segment of the global IT mar- 2014 after slipping 1.2 per cent in 2013. for the IT past and needs to be reno- ushers in the “internet of everything”. ket in 2014, according to figures pre- However, the firm slightly revised vated for the digital future,” says John Chambers, chief executive of pared by Gartner, the IT research downward the compound annual Gartner’s Dave Aron. Cisco, the supplier of networking firm. Spending on business software growth rate for IT services between But he warns that the skills equipment, predicted in his keynote is expected to grow 6.8 per cent to 2012 and 2017. This mainly reflects required to undertake the renovation speech at the Consumer Electronics $320bn this year, after rising 5.2 per reductions in outsourcing growth of core IT are different from those Show in Las Vegas this month that cent in 2013. rates, specifically, in co-location, host- needed to exploit such new technolo- the internet of everything – connect- Richard Gordon, managing vice- ing and data centres. Getting connected: John Chambers gives his speech at CES Bloomberg gies and trends as digital design, data ing people, devices and machines – president at Gartner, says: “Invest- “Chief information officers are science, “digital anthropology”, would drive the next wave of global ment is coming from exploiting ana- reconsidering [increasing the size of start-up skills and agile development. innovation and deliver $19tn in profits lytics to make B2C [business-to-con- their data centres] and are instead ices. Mr Brabban says: “There will be ductivity, enhanced customer experi- “Most businesses have established and cost savings to the private and sumer] processes more efficient and planning faster-than-expected moves a focus for cloud services in three ence and loyalty, and lower costs.” IT leadership, strategy and govern- public sectors over the next 10 years. improve customer marketing efforts.” to cloud computing,” says Mr Gordon. areas: management, integration and He says advances in sensors, dis- ance, but have a vacuum in digital While this wave would be powered He adds: “Investment will also be Over the past 12 months, the cloud aggregation.” play technologies, and devices will leadership,” he says. “To exploit dig- by an explosion in the number of con- aligned to B2B [business-to-business] has become an easy choice for main- Chris Curran, PwC US Advisory’s enable companies to monitor people, ital opportunities and ensure the core nected devices – predicted to grow analytics, particularly in supply chain stream organisations, says Andrew chief technologist, identifies business entities, behaviours, events, and of IT services is ready, there must be from 10bn to 50bn units over the next management, where annual spending Brabban, Fujitsu UK’s director of analytics as the top trend to watch. objects. clear leadership, strategy and govern- few years – Mr Chambers said it is expected to grow 10.6 per cent in application services. In the US, for “With business analytics, companies “Companies will use data originat- ance. Individual digital leaders are would be about far more than the 2014.” example, 80 per cent of organisations are realising the advantages of ing from these and other technologies not enough; all business leaders must number of internet-enabled devices After marking time in 2013, the total and consumers use public cloud serv- increased innovation, improved pro- to apply new analytic, statistical and become digital leaders.”

Data points Technology by numbers

Mobile recognition to unlock their screen, according to Devices Worldwide research by Ericsson. combined shipments of A total of 74 per cent devices – PCs, tablets, believe biometric ultramobiles and mobile smartphones will become phones – are projected to mainstream during 2014. reach 2.5bn units in 2014, a 7.6 per cent rise on 2013, Online retail says Gartner. For PCs alone, shipments fell 10 per cent US Overall fourth quarter last year to 315.9m units, online sales rose 10.3 per the worst decline in PC cent year-on-year, according market history. RBC Capital to Forrester Research. Markets predicts PC unit Mobile sales reached 16.6 sales will fall a further per cent of all online sales, 5 per cent this year. up more than 46 per cent over the same period of Operating systems Android 2012. Tablets accounted for is on course to surpass 1bn 11.5 per cent of online sales, users across all devices in against just 5 per cent for 2014. By 2017, more than smartphones. Tablet users 75 per cent of Android’s also averaged $118.09 per volumes will come order, against from emerging $104.72 for markets. smartphone users. As a percentage of Payments Forty- total online sales, three per cent of the iOS operating respondents to system was almost Ovum’s recent five times higher Consumer Insights than its Android Survey chose banks rival, accounting for as their most 12.7 per cent of trusted mobile sales compared payments service with 2.6 per cent provider. Then for Android. On come credit card average, companies (13 per cent), iOS users spent $115.42 online payment providers per order, nearly 40 per (9 per cent) and mobile cent higher than Android operators (6 per cent). users. Shoppers referred from Facebook averaged Investment Mobile $60.48 per order, versus operators invest more than $109.93 for Pinterest. But $100bn a year in capital Facebook referrals converted spending on their networks. sales at more than three The EU used to account for and a half times the rate of a third of the world’s those from Pinterest. telecom capex investment, but that has fallen below 20 China Online retail sales in per cent. Meanwhile, the US China are forecast to surge has held its capex constant over the next five years, and at almost a quarter of the the country is set to be the world’s total, even though world’s biggest ecommerce the global pie is getting market by next year, bigger, according to the according to Forrester CTIA, the US wireless Research. The research firm industry trade group. projects that sales will top $370bn this year, compared Advertising The global with $294bn in 2013, and mobile marketing and exceed $670bn by 2018. advertising market will grow from €6.9bn ($9.4bn) in Home technology 2012 to €27.9bn in 2018 – a compound annual growth Connected TVs The rate (CAGR) of 26 per cent, installed base of internet- according to Berg Insight. connected televisions in the By then, it will account for US will reach 202m units in 19.3 per cent of the total 2015, up 44 per cent from online advertising market or 140m at the start of this 5.9 per cent of the total year, according to NPD global ad spend for all Connected Intelligence. media. Globally, mobile search advertising is Video gaming About 65 per estimated to represent more cent of game spending in than 50 per cent of the total the US last year was on mobile ad spend, followed digital downloads, accounting by display advertising and for $13.3bn of the $20.5bn messaging. total, according to Newzoo. Digital game revenues rose Smartphone security Fifty- by 10 per cent. Tablet two per cent of smartphone gaming is expected to grow users want to use their at a CAGR of 47.6 per cent fingerprints instead of until 2016, while smartphone passwords and 48 per cent gaming will grow 18.8 per are interested in using eye- cent.

China online retail sales Total online retail spending Total online buyers ($bn) (m) 700 600

600 500 500 400 400 300 300 200 200

100 100

0 0 2012 13 14 15 16 17 18 Forecasts Source: Forrester Research