The new digital ecosystem reality: Digital commerce is a journey. Technology Institute November 2014

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1 The new digital ecosystem reality: Digital commerce is a journey Technology Institute November 2014

2 81 percent of CEOs believe that technology will transform their business PwC s 17th Annual Global CEO Survey, January 2014,

3 Overview The New Digital Ecosystem Reality is a series providing PwC s perspectives relative to the trends and challenges that businesses should consider to remain competitive. PwC has identified nine key technological, economic, and political trends for CEOs to consider. In this article, we look at digital commerce, which is affected by all nine trends, but most significantly by five in particular: disruptive innovation, managing cost and complexity, convergence, consumerization of IT, and the explosion of data. The ability to market, sell and serve through digital means has become a key expectation of all enterprises, but a variety of industry challenges complicate those efforts at Technology companies. An extensive network of resellers and integrators are involved in the selling and support process, which creates technical and operational complexity; High-tech industry customers have experience in technology and thus have high expectations for digital capabilities across web, mobile, and social; Companies are rapidly deploying new products and services, and need to provide easy and immediate access to pre-sales information, evaluation products, and current entitlements; The time has come for a new transition, one in which companies focus not on a digital strategy, but rather a business strategy for the digital age. Because of their unique position within this inflection point, Technology companies have the potential to take the lead in making digital commerce work, work well, and inspire customers. That means understanding the various facets of digital commerce, while carefully engaging customers and enabling partners. Technology companies find themselves in a uniquely enviable position these days. New digital technology has transformed almost every element of every business. But what enterprises have experienced and delivered up to now is only a small percentage of what s possible. The transformation toward seamless digital capabilities and especially digital commerce has only just begun. In PwC s 17 th Annual Global CEO Survey, an overwhelming 81 percent of CEOs believe that technology will transform their business, but that percentage is so high that the transition becomes meaningless if everyone does it. 1 Achieving a frictionless state of digital commerce requires careful business planning, operational excellence, thoughtful customer experiences, and a flexible technology architecture that can meet current and future needs. Companies need to start thinking not just of transactions but of the entire customer lifecycle. For Technology companies, addressing this lifecycle 1 PwC s 17th Annual Global CEO Survey, January 2014, means accommodating more moving parts than some other industries face. For instance, Technology companies tend to have extensive networks of resellers, partners, and systems integrators involved in the selling and support process. Frequently, these are geographically organized, necessitating insights into culture, currency, compliance, and other concerns. Companies must think through carefully how to engage directly with their customers without upsetting their partner ecosystem. In addition, companies must think about the tools they provide their partners to help them conduct business more simply. Technology companies find themselves in a uniquely enviable position these days PwC 1

4 Technology companies also tend to offer highly complex product offerings. These may be hardware, software, or systems that combine both. These offerings may involve complex configuration options, professional services, such as consulting, and educational services, such as training. The cost and availability of those services may be predicated on contractual discounts, renewal programs, and entitlement or license compliance. These challenges separate digital commerce from traditional e-commerce models found in other industries. By virtue of their frequently selling into IT departments, Technology companies face the blessing and the curse that their customers have extensive experience in technology. This means they also have extremely high expectations regarding digital interaction. These customers have a high propensity for doing research either online or among peers long before they identify themselves as a prospect and engage with salespeople. It s entirely possible that a Technology vendor without strong analytics and social strategy may lose business without ever having a conversation. In addition, Technology companies themselves are strongly impacted by technology itself. Just as in many other industries, their business models are changing. Their customers can experience their products in more ways than ever before. The industry has moved beyond the days of licensed software-in-a-box to SaaS subscriptions and freemium models. They can sample software in trialware versions before buying it, or even speaking with the company. These options affect more than Technology companies revenue streams. They mean that these companies must accommodate new ways of doing business, not only at the beginning of the sales and deployment process, but also when it comes time to renew contracts for products and services. But it s important to note that Technology companies themselves are not immune from the evolving digital landscape. They face competition from new market entrants smaller companies with fewer legacy products and cloudbased point solutions. Free from legacy constraints, they can be more nimble. Their SaaS-based models simplify installation and reduce infrastructure costs. They target influencers rather than buyers with online evaluations and trials, and they use the digital channel to keep field sales teams small. At the same time, customer expectations are changing in the B2B world. Enterprise customers are consumers in their personal lives, and they now have expectations based on their B2C experiences. These expectations range from easy access to product information to complex configuration, quoting, and pricing online, to self-service portals. Like consumers, enterprise customers will look for information both from the company itself as well as through social channels. It is important that companies learn to be part of the conversation. Based on these reasons, Technology companies face what may look like a daunting challenge, one that to solve it, requires understanding an unprecedented number of departments and capabilities. That s a Technology companies themselves are not immune from the evolving digital landscape big task, but one that with the right strategy can be tamed. Defining digital commerce An important aspect of digital commerce is its ability to encompass and enfold the entire, four-phase customer digital lifecycle: Discover Transact Fulfill Care Technology companies need to look at the elements in this lifecycle not individually, but rather holistically, and to do so in a way that creates a completely customer-centric view. This lifecycle in its ideal form is an ongoing process, one in which the customer discovers the vendor and conducts the transaction, after which the vendor fulfills the delivery and provides service and support. As the process continues, the customer discovers more of the vendors products and services, and the cycle begins again. The last area care is frequently overlooked by Technology companies as part of the sales and retention strategy, causing them to lose repeat business. Therefore, digital commerce requires tight integration of technology and business process across business, IT, marketing, and support teams. 2 The new digital ecosystem reality: Digital commerce is a journey

5 The four-phase customer digital lifecycle Discover Transact Fulfill Care Discover The digital channel is becoming increasingly more important as the source for generating new leads and customer acquisition. Potential customers will often use digital channels to find and explore offerings before engaging with field or inside sales. They expect rich content that goes beyond standard product information and they expect experiences tailored to their needs. Customers expect easy access to product information, case studies, videos, and evaluation products. Providing these types of capabilities allows companies to potentially identify leads earlier, while data collection and analytics tools allow companies to engage prospects with targeted offers earlier in the sales process. Even more important, is the information tracked consistently across multiple channels, so that representatives know whether prospects have visited the Web site, queried on social media about products, or watched a corporate video online. Transforming a prospect into a customer means having a better understanding of their interests and interactions with the company than ever before. Transact Technology companies should also consider how to apply technology to technology selling. What parts of the sales cycle can they automate, such as self-service configuration of quotes? The goal: automating as many segments of the sales cycle as possible, so that salespeople are focused on productive selling activities rather than time-wasting administrative tasks. At the same time, companies should apply similar automation capabilities to both partner enablement and customer enablement. This means allowing partners access to sales systems, and enabling prospects to design their own desired systems, even from a pick-list, indicating as much as possible their options for other services, such as consulting and education. Fulfill As Technology companies evolve their products and enhance their digital engagement with customers, fulfillment becomes more challenging. It becomes more of a PwC 3

6 consideration during both the evaluation and post-sales lifecycle stages. Companies must provide their customers easy self-service access to those products and services that they are entitled to use. For cloud providers, fulfillment is an ongoing process that requires very high availability. While fulfillment can be challenging, the ongoing engagement creates another opportunity to collect data and engage with customers. Care As the preceding interactions have changed, so too must support. Many Technology companies are already recognizing that support is more than just resolving break-fix issues it s an opportunity to engage with customers. In addition, understanding how end-users consume products and services provides companies with tremendous opportunity to identify high-value enhancements, engage with customers, and proactively identify and resolve support issues. Thanks to the deeper insight Technology companies have, customers in turn expect companies to be knowledgeable about their relationships. For example, do customers have self-service access into purchase history, SaaS billing, warranty and licensing expiration dates (and have indeed checked them)? If so, customers expect that a customer service representative won t waste their time repeating information they already know. In response to this new landscape of digital interaction, many companies have identified executives responsible for customer success; that is, ensuring that interactions throughout the customer lifecycle are consistent with both customer expectations and the brand promise. The ultimate goal of these activities is to digitally integrate the customer lifecycle, creating an end-to-end customer experience that acts as a competitive advantage for Technology companies. Done well, such a digital commerce strategy puts the customers first and capabilities are delivered through operational and technical excellence. Just as all channels must be integrated, so to must the discover/transact/ fulfill/service processes be well integrated. Tools should remove friction from the process as much as possible and enable all participants in the process: prospects, customers, partners, salespeople, marketing staff, and the technical support team. Supporting an end-toend digital commerce experience As much as automation and selfservice capabilities can support a digital commerce strategy, one cannot be deployed solely on the foundation of technology. Technology companies must consider the many organizational implications as well. They need to address internal organizational challenges and confirm they do not constrain the company s ability to deliver digital experiences. Digital commerce should provide a single face to the digital customer, one that hides the complexity and internal organizational structures. For many Technology companies, moving toward an integrated digital commerce capability starts by breaking down silos within their companies. Only by breaking down silos will they be able to increase collaboration among internal and external teams. And only by increasing collaboration will they be able to increase customer value, improve customer experience, and increase customer engagement. Before companies can break down silos and organize teams, companies must define their business strategy for the digital age. Companies must identify who they want to be in the In the digital commerce world, Technology companies must be able to embed and analyze processes across all stages of the lifecycle to measure business impact digital space. Is your digital strategy to educate prospects and enable business partners; is your goal to deliver pre and post-sale capabilities; or is your strategy to provide directto-customer capabilities that deliver discover, transact, fulfill, and service functionality? How companies answer these questions will influence organizational structure, technical architecture, marketing approach, and channel strategy. Another key issue to address: The ability to drive meaningful business decisions through data. Consistent with the shift from transactional e- commerce to building a digital relationship that serves entire customer lifecycle, analytics the ability to track both micro and macro patterns become more important. In the early days of e-commerce, we looked at discrete statistics such as net new visitors, page views, 4 The new digital ecosystem reality: Digital commerce is a journey

7 conversion rates, and cart abandonment. In the digital commerce world, Technology companies must be able to embed and analyze processes across all stages of the lifecycle to measure business impact. Given the complexity and cost of many technology products, traditional ecommerce metrics such as average order value or cart abandonment, do not apply. Companies must be able to measure digital commerce s ability to attract new leads, assist in the acquisition of new customers, and retain existing customers. A wellexecuted digital commerce strategy should reduce the cost of sales, reduce the cost to serve, and improve customer retention. Getting started on the digital commerce journey While a thorough digital commerce strategy requires a holistic perspective, that doesn t mean that Technology companies transformations require an enervating boil the ocean effort. Creating a distinguished digital commerce experience one that transcends simply adding more technology is an evolutionary effort, not a revolutionary one. For the sake of competitive advantage, of course, it s important to start the process, especially since competitors are doing so and catching up may be difficult later. But the process can be broken down into smaller tactics, using the following leading practices. Think about customercentricity. What kind of experience do you want prospects and customers to have? How can you reduce or even better, eliminate, friction and confusion among processes? Indeed, each of the following points should be viewed through the lens of simplifying the customer experience. Lead with the customer experience rather have your current technology drive the experience. Identify digital champions. Within each of the crucial departments (sales, marketing, support, product development) and among your partners, there are likely people who thrive on using collaboration to make processes move faster and more smoothly. Identify them and get their input. Experiment. Unleash your champions to try pilot projects, using tools that they think will provide the biggest payoff within the shortest amount of time. Track the results to get a sense of the potential benefits. Break down silos across marketing, sales, and service. Identify ways that these departments can work better together. Identify issues that crop up regularly, and look for ways to automate or at least speed up resolution. Set up an online community. Give your customers and partners a way to communicate among themselves, while at the same time using it as a way to discuss products or new features that may resonate with customers. Encourage interaction and peer discussions and ask how customers would like to communicate with the vendor. PwC works with companies Whether in technology or other industries to make the transformation toward a reliable, viable digital commerce strategy. PwC s consultative services start with a discovery of the desired customer experience, followed by an understanding and mapping of the complex interactions of people, process, and technology involved in the customer lifecycle. This mapping starts with operations and organizational structure, acknowledges technology and compliance needs, and then overlays where they affect customer experience. PwC can accelerate this process through the use of leading industry tools and accelerators. These help from strategy through execution across the business and technical aspects of a digital commerce initiative. We help our clients make the transformation toward a reliable, viable digital commerce strategy by using our design tools, leading industry methodologies and practices for digital commerce, and by incorporating everything from user experience design to backend integration. The result is a solution that enhances customer experiences and increases business value across the customer lifecycle. We have used this approach many times to help global Technology companies become more efficient and increase revenues. PwC 5

8 PwC can help For a deeper discussion on digital commerce, please contact one of our leaders: Joseph Lamano Principal, Digital Commerce Leader Michael Pearl Global Cloud Computing Leader Let s talk Please reach out to any of our technology leaders to discuss this or other challenges. We re here to help. Tom Archer US Technology Industry Leader Cory Starr US Technology Assurance Leader Kayvan Shahabi US Technology Advisory Leader Diane Baylor US Technology Tax Leader Acknowledgements The following PwC professionals contributed their experience and knowledge to produce this paper. Todd McElfresh Director, Digital Services About PwC s Technology Institute The Technology Institute is PwC s global research network that studies the business of technology and the technology of business with the purpose of creating thought leadership that offers both fact-based analysis and experience-based perspectives. Technology Institute insights and viewpoints originate from active collaboration between our professionals across the globe and their first-hand experiences working in and with the Technology industry. For more information please contact Tom Archer, US Technology Industry Leader PricewaterhouseCoopers LLP. All rights reserved. PwC refers to the United States member firm, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see for further details.

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