Technology Benchmarking Survey
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1 NAED NATIONAL ASSOCIATION OF ELECTRICAL DISTRIBUTORS Technology Benchmarking Survey Table of Contents Top Technology Concerns 2 Methodology 2 Participants 2 Data & IT Roadmap 3 Website Functionality 4 E-Commerce Functionality 5 Mobile Devices/ Technology 6 Social Outposts 7 Back Office Technology 7 Next Steps & What You Can Do 8 Executive Summary This Technology Benchmarking Study was the brainchild of NAED s South Central Region Council. The objectives of the study were: Benchmark technology implementation; Identify technology issues and challenges electrical distributors face; and Identify areas where NAED can facilitate improvement. The study requested distributor executive input on the following topics: Technology Priorities, Challenges, and Opportunities Website Functionality E-Commerce Capabilities Adoption of Mobile Devices/Technology Back Office Technology Implementation This study creates a baseline of the status of technology adoption in the electrical industry in a format that can be used as an on-going industry benchmark. It allows individual electrical distributors to evaluate where they are today, develop a roadmap to world-class performance, and benchmark progress. In addition, a task force of volunteer distributors will use the results to build an awareness of technology issues so the industry is up-to-date on these issues, while allowing individual distributors to leverage their own unique competitive advantages. What are the industry s greatest technology challenges? Data dominates the list. Of the 94.2% of respondents with websites, only a select few offer the E-Commerce functionality available at competitive B2B websites, such as Grainger.com. While Smartphones and tablet computers offer new opportunities to connect with customers, only 50.7% of respondents rated employee expectations that the workplace keep pace with the latest technology as a Critical or High Priority.
2 Top Technology Concerns Ensure data in business system is accurate and up-to-date Ensure data security across all locations and devices Finding a reliable source for accurate pricing and product information E-Commerce deployments or improvements Create an information technology (IT) strategic plan, technology roadmap, or revise current IT strategy Adoption of mobile devices/technologies Website creation or enhancements Methodology The data contained in this report was collected via an online survey during the summer of The survey questions were formulated from input from NAED s South Central Region Council. s were sent to NAED Distributor Delegates and Alternates. 1 Follow-up invitations were sent to Information Technology (IT) contacts at NAED Distributor member companies not responding to the earlier invitation. Participants 69 Companies Responded Responses were received from 69 individual distributor companies, representing 15.6% of NAED Member Companies. Eighty-three percent of the responses were from NAED Distributor Delegates or Alternates; 17% of the responses were from Information Technology contacts. < $10,000,000 $10,000,001 - $25,000,000 $25,000,001 - $50,000,000 $50,000,001 - $100,000,000 $100,000,001 - $400,000,000 $400,000, % 17% 7% 20% 28% 19% For comparative purposes, the chart above uses the sales volume breakdowns from NAED s Performance Analysis Report: The Benchmarking Tool for Operations (PAR) National Association of Electrical Distributors Technology Benchmarking Survey 2
3 The Findings Data & IT Roadmap Concerns about data are not unique to electrical distribution. However, the priorities placed on ensuring the data in a distributor s business system is accurate and up-to-date (Critical or High Priority to 92.8% of respondents), data security across all locations and devices (Critical or High Priority to 84.1% of respondents), and finding a reliable source for accurate product and pricing information (Critical or High Priority to 73.9% of respondents) are noteworthy. Critical or High Priority 92.8% 84.1% 73.9% Creation of an information technology (IT) strategic plan or technology roadmap could address and possibly even remedy the respondents concerns about data. However, it ranked 4th on the priority list, behind data, as a Critical or High Priority to 65.2% of respondents. Ensure data in business system is accurate and up-to-date Ensure data security across all locations and devices Finding a reliable source for accurate product and pricing information Data, Data, Data!!! 2011 National Association of Electrical Distributors Technology Benchmarking Survey 3
4 Website Enhancements A distributor s website can be a significant contributor to internal productivity improvements by providing instant access to product information, inventory on hand (stock levels), etc., from any Internet connection. If website navigation is easy and they are trained where to find specific information and use specific features, even customers find it time saving to self-serve for routine inquiries 24/7/ % of Respondents companies have websites 2 Website enhancements were rated as a Critical or High Priority by 58.8% of respondents. However, while a few respondents measure the number of website hits, the majority did not know how many customers access their website monthly. Of the distributors that measure customers access, 70% of the respondents estimate that less than 20% of their customers access their website monthly. Website Functionality Available Today Purchase Suggestions 8% Online Help 10% Technical Data Sheets/MSDS 24% Social Outposts 31% Stock Levels 41% Advanced Search 43% Quote Capability 46% Basic Search 51% Links to Manufacturers 82% Contact Information 97% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% If it is easier for customers to get information online, they will self-serve. But distributors must train customers how to find the information National Association of Electrical Distributors Technology Benchmarking Survey 4
5 E-Commerce deployment or improvements Internet technology continues to revolutionize industries. Wikipedia upended the encyclopedia industry. itunes changed the music business forever. Amazon s online book sales led to the demise of many independent booksellers. Now Amazon, Grainger, and even Fastenal (a fastener distributor) sell a multitude of electrical products online. Grainger s 2010 online electrical sales were almost $1.8 billion E-Commerce was rated a Critical or High Priority by 66.7% of respondents. However, of the distributors with online ordering capability, many distributor executives don t know how many customers are entering orders through their website or the percent of total company sales entered online. Customers will take the path of least resistance: Ordering online must be easier than phone or fax ordering E-Commerce Capabilities Available Today Sales Tax Estimates 28% Advanced Account Management 35% Online Payment 45% Customized Search Results 47% Basic Account Management 49% Linked to ERP for Real Time Results 51% Customer Specific Pricing 53% Personal Product Lists 53% Online Ordering 59% Login Capability 63% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 2011 National Association of Electrical Distributors Technology Benchmarking Survey 5
6 Adoption of Mobile Devices/Technologies Mobile Devices/Technologies offer mobility, flexibility and productivity and were rated as a Critical or High Priority by 59.4% of respondents. Apps, mobile-optimized websites (.mobi), and QR codes are in the early stages of adoption, tablet computers are gaining a foothold (84% of Tablet Computers are ipads), while Smartphone and laptop use proliferates. Smartphones proliferate, Tablets usage increasing Mobile Devices Available Today QR Codes 6%.mobi 12% APPs 15% Tablet Computers 42% Text Messaging 79% Smartphones 84% Laptops 92% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Suggested Apps: Locate branches near you; take photo, get product info; stock levels Smartphone Platform Market Share During the year ending September 2011, 87.4 million people in the U.S. owned Smartphones, a 12% increase from the preceding quarter. Google s Android operating system ranked as the top Smartphone platform with 44.8% of the market, up 4.6% from the prior quarter. Apple was ranked 2nd, growing 0.8% to 27.4% of the Smartphone market. RIM (Blackberry) ranked 3rd with 18.9 percent share, followed by Microsoft at 5.6% and Symbian at 1.8%. 3 Smartphone Operating Systems (OS) used by ED s 6% Blackberry ios 20% Apple ios 46% Android Microsoft 27% In contrast to the U.S. Smartphone market, Blackberry currently dominates in electrical distribution. However, one has to wonder if this phenomenon will continue in the face of recent RIM service problems and the proliferation of Android Smartphones. Blackberry currently dominates in electrical distribution 2011 National Association of Electrical Distributors Technology Benchmarking Survey 6
7 Social Outposts (Facebook, LinkedIn, Twitter, Youtube, Reddit, etc.) Technology Benchmarking Survey Social Outposts were barely on the radar screen, with only 18.8% of respondents viewing it as a Critical or High Priority. However, it is an emerging trend to monitor closely since it accounts for a tremendous amount of Smartphone usage. An emerging trend to monitor closely Back Office Technology Implementation While back office technology runs the business, one size does not fit all. Successful implementation of back office technology requires it be tailored to each individual company s processes as well as the needs of individual users. For example, Sales Force Automation (SFA) must be tailored to the needs of the sales representative, Customer Relationship Management (CRM) to the needs of the customer, Warehouse Management Software (WMS) to the company s operations, etc. Perhaps this explains the low levels of adoption in electrical distribution. Back Office Technology Available Today SFA 15% RFID 19% CRM 22% Truck Routing Software 31% GPS 46% WMS 47% Online Meetings 47% VOIP 55% Bar Coding 57% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Technology that runs the business 2011 National Association of Electrical Distributors Technology Benchmarking Survey 7
8 Next Steps Since there are opportunity costs of not investing in new technology, it is in every distributor s best interest to keep pace. This study creates a baseline in a format that can be used as an on-going industry assessment. In addition, NAED formed the Strategic Technology Task Force to provide recommendations and guidance to the industry. The mission of the Strategic Technology Task Force is to: Provide a roadmap for the industry to respond to technology innovations Offer recommended solutions to common technology issues Educate the industry on how to use technology as a competitive weapon to cement the viability of the channel into the future Develop a mechanism to evaluate and measure the ongoing level of technology usage as a channel The Strategic Technology Task Force is using the results of this study to develop tools to allow individual distributors to assess how they measure up against best-in-class performance a continually moving target gather customer input about various technology features, and expand the IT metrics in NAED s Performance Analysis Report (PAR). What You Can Do Now more than ever, information technology is an investment in the future of your business. Assess the technology your company uses today and evaluate where you d like to be. Develop a plan to bridge the gap. The innovative use of technology will allow your company to attract the best and brightest workforce and allow you to lead your customers to a profitable future. Invest in the future of you business 1 In the two instances where both the Delegate and Alternate of the same company responded, only the response of the Delegate was included in the results. 2 Respondents with no website had sales less than $10 Million 3 Com Score Reports September 2011 U.S. Mobile Subscriber Market Share 2011 National Association of Electrical Distributors Technology Benchmarking Survey 8
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