'Extreme Apps’ Approach to Analysis Makes On-Site Retail Experience King Again

Transcript of a discussion on how technology providers have teamed as an ecosystem to develop new dynamic and rapid analysis capabilities for the retail industry.

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Dana Gardner: Hello, and welcome to the next edition of the Hewlett Packard Enterprise (HPE) Voice of the Customer discussion series.

Gardner

I'm Dana Gardner, Principal Analyst at Interarbor Solutions, your host and moderator for this ongoing discussion on IT innovation and how it’s making an impact on people’s lives.

Our next big-data use case discussion explores how technology providers have teamed as an ecosystem to deliver new dynamic and rapid analysis capabilities to the retail industry. We’ll explore how the Extreme Apps for Retail initiative places new knowledge in the hands of on-site sellers -- to the customized benefit of shoppers at the very point of sales and in real time.

By leveraging power of SAP HANA big-data software infrastructure, HPE hardware, and Capgemini targeted analysis and intelligence, these Extreme Apps are designed to make the physical retail experience king by leveraging the best of online assets – all brought to enhance the user experience at the mobile edge.

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On Extreme Applications for Retail
Built on SAP HANA

To learn more about how individual buyer information and group buying behavior inferences combine to customize the buying experience anywhere and anytime, please join me in welcoming our guest, Frank Wammes, Chief Technology Officer, for Capgemini Continental Europe.

Frank Wammes: Thank you, Dana. It’s great to be on the show.

Gardner: We're delighted to have you with us. Frank, we’ve had so much change over the past five years in retail. It’s a vertical industry that’s under lots of pressure with a need for innovation. What, in your mind, are the top trends driving this desire to use big data to better enhance users’ ability -- at the retail site -- to get customized buyer experiences and customized deals based on their individual needs and wants?

Wammes: Retail indeed is one of the industries which is most impacted by the outflow of financial crisis in 2007-2008, where a lot of companies struggled. They ask: “Okay, how are we going to revive our business?” It's been an industry where you could see the winners and the losers very clearly. But there are a few things that everybody in the retail industry is now thinking about and need to answer.

Wammes

First of all, the big opportunity that retailers have is leveraging the whole big-data movement. There is so much data that retailers have about their customers and the consumers, structured and unstructured data, that they can benefit from. The only question is how they'll do that and they're going to make sure that all the data that they processed comes to action in order to create better experiences in the store or on the website.

The second big trend is how to gain the loyalty of your buyers? We see that it’s very easy for consumers to switch between different brands, between different retailers, between different stores, and loyalty is something that came in the past but it’s something that will not come automatically now or in the future.

But if you give a client a real custom experience, and they know that every time they come to you they'll get the same experience and they’ll get the benefits because of their loyalty, they'll adapt their needs in real time and will keep their loyalty towards your brand. So the second question is how do you increase their loyalty.

And third, it’s really the combination of the online and physical retail experience, the only general experience that people have. How do you make sure that during the buying journey of a customer, they continuously have the same experience?

Wowing the buyer

We always joke that if you go to a retail outlet in your specific country, how many retailers, when you have bought something online and you want to cancel it and you want to buy something in the store, can you go to that store, cancel that order, and make sure that you can take a physical good out of the store? In 95 percent of the cases, that will not be the case. It’s very easy to surprise your customer if you can do it. So how can you wow your buyer and give them the real experience?

Those are the three big things: leveraging all the data to increase the loyalty in both online and offline worlds.

Gardner: It’s interesting that we're using big-data and intelligence to, in effect, combine what happens online with what happens in real-time and real space. Until fairly recently, people expected their online shopping experience to be the one where analysis was being derived from their actions, from their history, their clickstream, and so forth.

It's fascinating that we're able to now bring analysis to the physical site, and it seems that shopping is one of those things where so much more can be done when you're actually in touch with the goods, to be able to feel them, see them, try them on.

Why have we had a problem getting to this point where we can combine the best of online analysis capabilities and data gathering with the physical world? What have been some of the problems that needed to be solved in order to get to this point?

From an online perspective, we've been able to give you much more personalized offers or a better experience towards your needs using the intelligence and the big data.

Wammes: Once you went online, people could capture where you came in from through your IP address. So if you consistently came through that IP address you didn’t even have to have a loyalty card. We knew that you were a returning client.

We probably knew that you bought something. That was the reason why, from an online perspective, we've been able to give you much more personalized offers or a better experience towards your needs using the intelligence and the big data.

The issue was that in the physical store, once you entered, we didn't know who you were. Probably at the counter, at the moment that you already made your purchase, you drew your loyalty card. That was the moment that we could do something for you, but that was already at the end of the purchase.

A lot of the technology has changed. One of the things is that you can have your sales agents in the stores, or your sales representatives in the stores, and have them use tablets.

So once people are shopping in the physical store, I can create a contact moment and I can probably ask them for their loyalty card or if they've bought something, yes or no.

Beacon technology

Even more important, one of the other things that you can do now is with beacon technology. Once you come in with your phone and you already have a connection to the company because you're in some kind of a loyalty program, you already downloaded an app from that specific store, at the moment that you enter, we know that you entered.

We can upload a picture on the sales rep's mobile device, so that he can proactively approach you and say, "It’s so good that you came back again. How was the coat that you bought last time?"

The moments that we can have in these interactions with our customers within the retail store gives us the possibility to the leverage from the insights and the big-data capabilities. That's something that we didn’t have in the past.

That is the thing that helps. Now, we have the capabilities and the technologies to crunch all that data in real time. It's good that I can recognize my customer, but more importantly, I now have the technology to instantly, in real time, crunch all the data so I can give him this personal experience.

Gardner: I can see why you are calling it “Extreme Apps.” It really is powerful and interesting that you can do all this now –- to have someone greet me and recognize my last purchase and follow up on that. Clearly, with my opt-in at a store,  I'm giving them information, but I'm getting a lot back in return. It really is groundbreaking.

This is something that we're also actively looking into, making sure that the retention of the consumer will be increased.

Is this something that we're seeing only in retail or are there other vertical industries, not to go too far a field from our discussion, but is this something that’s applicable beyond retail and is that something you’ve considered?

Wammes: There is a little bit of retail in a lot of different industries. We initially focused on hardcore retail. The reason we did it is because we looked the industries where so much transactional data is coming in that we can crunch the data and use the power of in-memory analytics. That was the starting point.

Then you can look at utilities, because with the utilities there are so many streams of information and so many transactions that you can crunch the data and get a personal experience, particularly now with the deregulation of the utility industries. This is something that we're also actively looking into, making sure that the retention of the consumer will be increased.

The banking industry, the insurance industry, all have this kind of retail perspective. On the other hand, we're also are in talks with some oil companies that have their retail outlets, sometimes directly or sometimes indirectly.

We had some discussions with a very large beverage producer. We said they could perhaps offer analytics as a service towards retailers, so that the retailer themselves don’t have to buy the analytical capabilities. The companies could offer this as a service so that they have more influence and insight on what’s happening with their product. Perhaps they could put that into the hands of an independent party so that the retailer doesn’t see all this insight.

We see the retailer as the starting point because of this experience, the customer experience, that you directly can enhance. But there is a lot of retail kind of experience in the banking and insurance industries. So the opportunities are more diverse, and it all leads to how can I optimize the personal experience the individual buyer has with our company.

New combinations

Gardner: It’s fascinating. We're really combining the physical world, the mobile tier data, across existing industries in really new ways.

Let’s explore how that “Extreme” experience benefit on the front-end is made possible by some extreme technology on the back-end, so to speak. We have several different players involved here: SAP, HPE, and Capgemini. Explain to me how these partners in this ecosystem have come together, and what each contributes to the ability to deliver these capabilities.

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Wammes: Definitely, because it is extreme, but it also required some extreme engineering of new technologies in order to create it.

What we have done is a combination of some very strong partners of ours, where we try to leverage the new technology. First of all, it started with SAP HANA. It was also the question that SAP posed to us. We have HANA as the in-memory engine, but we have it just as an engine. Can you, with your creativity and your industry knowledge, create some solutions on top of it? That’s where this whole Extreme Apps started.

SAP comes in with their traditional Business Suite, but the Extreme Apps are explicitly built into the SAP HANA platform.

SAP delivers the HANA technology, and what we also offer, but this is optional. We also say that if you don’t have a proper back end to provide you all this data and to capture all the data and all the transactional data, Capgemini has built a retail template on top of the SAP Business Suite. So we have a preconfigured retail solution for those companies that don’t have a proper or a state-of-the-art enterprise-resource planning (ERP) system yet Capgemini’s One-Path solution.

First of all, SAP comes in with their traditional Business Suite, but the Extreme Apps are explicitly built into the SAP HANA platform. HPE delivers the hardware and the services, the hybrid cloud expertise. Together with SAP and HPE we look at the architecture, because you always want to have all your data in memory mode. We also took in technologies like Hadoop to make a distinction between the hot data and the cold data that we work on in our analytics space.

What Capgemini added on top of it basically was the algorithm. We leveraged on the algorithms that we had to put into this Extreme environment. It runs now on the Capgemini data centers, on the HPE systems , but we can leverage this in multiple ways.

You can host it in the Capgemini data center, you can have it installed on-premise, we can have it in the cloud, and we can also deliver it as the normal traditional license and transaction price. But we also engineered it together with SAP and HPE so that you can also have it in a price-per-month scenario.

Gardner: So in addition to this flexible-deployment capability -- where you can bring these Extreme Apps anywhere, anytime, anyplace -- you also have a set of APIs available so that this can be customized and adapted to a mobile, web, point of sale, and so forth client. Tell me about the role of the API and the ability to customize apps and delivery.

Two big scenarios

Wammes: If you look at the Extreme Apps that we have right now, we have two big scenarios. We've already built other analytics around it, but there are two big scenarios. One is the Market Basket Analysis and the other is the Next Best Action.

The Market Basket Analysis is the tool for the merchandise agents. They want to know whether if they make a promotion, does it really add to the margin of the company, or if they look at a certain promotion, why is it performing better in location A compared to location B?

You want to leverage a lot of the analytics and the visuals that are already on the web, but that’s through your normal web browser. It’s the professional user using it. We deliver the standard analytics and the standard visuals. There isn't a lot of tailoring around it.

The Next Best Action is a completely different ballgame, Dana. You want to provide the capability to offer something while the user is making his purchasing decision, and that can be through all different kind of things. It can be when a client is shopping on your web site and then you want to have this engine immediately promoting something that is relevant for the user.

It could also be that he walks by your company, and this is an example that we had with a lingerie store. They said when they have the telephone number of a client and they know through our beacon technology she is walking somewhere around our store, we give her a promotion. So we give her a 10 percent discount if she comes into the store and buys within an hour.

We already said it’s good that you give the 10 percent promotion, but wouldn’t it be much better if you give a very explicit promotion based on her buying pattern and based on the buying patterns of others who bought similar kind of products? Then, the promotion really becomes valuable. You want to have the promotion on your mobile. For your sales reps, you want to have it in a specific function, which gives them the opportunity to have a good conversation with the client while they are in the store.

We have developed some standard screens already, whether it's for mobile, tablet, the web. More importantly, all these companies already have their mobile apps, or already have a sales representative outlet. We need to create an API so they can embrace it and incorporate it within their own existing environment, so that they really can start quickly and don’t have to do a complete rebuild of their environment.

This is the way the API works. Through the API they can get the promotion data and can incorporate it in their existing applications.

Gardner: Frank, where are we on the roll-out or milestones for this Extreme Apps for Retail initiative? Tell us a little bit about that: when it started, where we are now, and when we should expect to see more of these apps in actual use.

Adding value

Wammes: It began about two years ago when we had the discussion with SAP, where they first started to build applications on top of HANA. How can you add value from an industry perspective towards this technology platform? That’s where we started. We built it.

We also crafted it together with a clothing retailer. It was not just created within the buildings of Capgemini and with the help of HPE and SAP with no client. We built it together with a client. We immediately knew the issues that they had, and not only leveraging our own industry expertise. So that was basically the first client.

And then we went into a do-it-yourself retail chain, where we implemented it. We saw that when the users, and particularly the professional users of the application, saw what the potential is, what you can do with real-time, in-memory capabilities, immediately additional questions emerged.

We started with these two applications, but then the question was, "If you have my point- of-sale-data, can I also create a report so that I can show my CFO what the daily sales are, but in a very advanced graphical way?" By the way, we leverage all the standard visualizations that you get with HTML5. So you can set up many libraries.

If a client installs one of the main scenarios, we already provide them with the reports that we have and that we build from the other clients.

So quickly, we had four or five additional reports that were built, because we already worked on the past data. This is where we are right now. We have the two main scenarios. If a client installs one of the main scenarios, we already provide them with the reports that we have and that we build from the other clients.

We have some additional algorithms and test environments where we continuously are in discussions with our clients. Which algorithm is most valuable to your business? We said, "If you're an SAP dominant client, and you're already leveraging the power of the Extreme Apps, we'll make sure that we extend the scenarios that we have with that algorithm that you have."

We can anticipate that, in the coming year, we'll build more based on the proof of concepts (POCs) that we will do with our clients, where first we'll test the algorithm and then we'll build it into the HANA platform, thereby enhancing the portfolio of the different Extreme Apps scenarios.

Gardner: Given that these services, these apps, are available and are proven in the field, if an interested organization wanted to start leveraging these capabilities, how long does it typically take, and what's involved in getting this actually in implementation?

Wammes: That’s the cool thing. There are a lot of aspects, which you also already have recognized, that required Extreme Apps for Retail. Perhaps the most Extreme is the implementation time.

We leveraged the environment that we have within the organization, the combined Capgemini-HPE environment. If you deliver your data in the data structure that we ask, then we can store your data into Extreme Apps, and within two weeks, you can start experimenting to see whether the technology works for your company.

Improving promotions

Give us your data, and we'll load it into the Extreme Apps environment. For your Market Basket Analysis, you can already do the first analysis, where you can see where you can improve your promotions, whether you are making the wrong decisions and putting items in promotions which negatively affect each other.

We can already provide you environment where you can do your proof of value to showcase that, within a very short time, you can have a return on investment (ROI).

Because we have this API, we can also immediately integrate it within your existing environment, whether it’s your app, your web browser, or your Internet page. You can already start experimenting by giving a little bit more advanced, more analytical capabilities.

So it’s not only that you recommend this product because other people who bought product A also bought product B. Rather, because you bought these series of products, I compared it to people who also bought these series of products, but they then bought product B. So the advancement of the analytics is much bigger than the traditional, "If you buy A, then buy B, because others also bought B."

This is something that we can have installed very quickly, and once you want to go in production, it depends on whether you want to go on-premise, or whether you want to go hybrid. In the meantime, you can leverage the environment that both HPE and Capgemini set up in our own data centers.

It has also been a journey for us learning that it is not only the capability of doing the analytics, but it has changed the way that you can do your business models.

Gardner: So you can integrate to a retail organization’s website capability, their online marketing or marketplace and selling, and any buying capability -- and also reach out to their point-of-sale retail outlets in as little as two weeks?

Wammes: Exactly. I think the combination is now the cool thing that we see, and that’s also Dana, some things that we learned. We started off with the traditional model and we built the scenario. If we went to a client, they needed to buy the HANA license, they needed to buy the hardware, and they needed to buy a scenario from us. Then, we built it in a offering where you do it on a monthly basis. What we're now seeing is that together with other solutions, we can have it integrated in some engine.

So for instance, Capgemini has another piece of intellectual property (IP), which is called RM3. RM3 is a middleware solution where you can optimize your promotion, so you can mix and match the promotions to tailor it as much as possible to the individual need.

But now, we can put the Extreme Apps in it and make the promotion more advanced. We're in talks now with some other clients who have their own engines, where they give promotion capabilities through mobile apps, but they don't have a powerful analytics module behind it to make it personal. Now, they can have this Extreme Apps as the engine.

It has also been a journey for us learning that it is not only the capability of doing the analytics, but it has changed the way that you can do your business models. This applies both to the retailer, as well to the conglomerate that we are working with.

Better analysis

Gardner: Of course we know from the benefits of data and analysis that the more data and the longer period of time, the better the analysis. So, you're able to give your individual retailers more insight into individual behavior. They're able to see their own processes, promotions, and enticements work better, but stepping back, you're also, at the Capgemini level, getting a lot of insight into an even larger set of data across multiple retailers, multiple types of shopping environments, and multiple types of buyers.

Does that mean that you're going to get better algorithms and better insights from this larger historical set of data that can then be applied back into this set of Extreme Apps?

Wammes: That is a very good suggestion for an additional business model, Dana, to be quite honest.

Now, we separate the different environments. So, at this time, it’s the environment that we set up and the algorithm work for the specific individual client.

What we now do, which goes a little bit to your point, is that we learn from how the different clients that use our Extreme Apps leverage the Extreme Apps to optimize their promotions and their interactions with the client. That’s the first step.

At this time, we're not at the point that we say we can leverage the knowledge that we take from the multiple client sets. However, what you refer to is something that we've thought of already, but it comes back to the example that I gave on the beverage producer.

That’s where the learning on the multiple clients and multiple different retail stores will kick in.

If you, as a consumer goods company, can provide an engine to a retailer or to a multiple set of retailers, where you say, "We can help you in optimizing your promotions so that, in the end, you will sell more, and if you sell more, we will also sell more."

That’s where the learning on the multiple clients and multiple different retail stores will kick in. We've thought of that concept, but not so much offered the users of our Extreme Apps solutions. It's more in the context of whether consumer product companies can offer this as some kind of analytical capability towards different retailers?

Gardner: Perhaps, Frank, in a year or two we will have another conversation where we will talk about how synergistic shopping works. When you buy one type of product, it might mean you will be buying another soon, and some coordination and intelligence can be brought to that.

Wammes: Yeah, definitely.

Gardner: In the meantime, do you have any examples of either named or unnamed organizations that have put the Extreme Apps for Retail to use? What business benefits they get from it? Any measurements of success, such as, we were able to increase share of wallet, we were able to increase larger sets of purchases by certain buyers? Anything along the lines of proof points for how well this works?

Business cases

Wammes: Yeah. Well, I can mention some industries. We can't disclose specific types of retailers. When we looked at the business case that we got for the do-it-yourself company, their main business case was on the Next Best Action.

They saw the potential to do an increase of about 25 percent, because they could better target the promotions that they gave. It was also because we started to introduce the Next Best Action on the apps and on the website, which is a very growing business of course in that specific industry. So making sure that the up-sell and the cross-sell emerged was really the business case on the do-it-yourself side.

With the food retailer, it’s much more about the merchandized planning. What we saw particularly was the promotion. That was a business case where it was something about four percentage points of improvement that could be achieved easily. So there wasn't much action.

They saw the potential to do an increase of about 25 percent, because they could better target the promotions that they gave.

The benefit really was that, through the analysis, we could see which products had affinity with each other, but also what the potential financial benefit between those two products were if you would not put them into promotions again, or if you put them explicitly into promotions?

As an example, and I think it’s the most easiest example, but everybody understands it, if you sell crisps in your promotion, don't put your beer into the promotion, because there is such a high correlation between people who buy beer and will automatically buy crisps as well. So don't do that.

Through these kinds of correlations and affinities, we could have a four percentage point improvement on the revenue, making sure that people would not do the promotions again.

Learn More
On Extreme Applications for Retail
Built on SAP HANA

We were able to reach a couple of percentage points because we could sell products which were very slow selling and where you could have issues on your expiry date. We could identify what kind of products they would sell. So if I have this low turnover of goods, but I put a promotion on high turnover of goods, with a high probability that the low turnover of goods would sell as well, then I would get rid of the inventory.

We also saw that the three percentage point potential was really about don’t put something on promotion where a product with a high affinity is out of stock.

These are the real examples that we have in the different industries.

Gardner: Now, these are benefits that are clearly significant to the seller. We're talking about retail, where it’s very competitive, and there are large revenue numbers involved. So a couple of percent is a lot.

But what about the buyer? Have you done any surveys or questionnaires, found out why the buyers are benefiting from this, and what it makes in terms of loyalty develop with them?

Personalized experience

Wammes: The research was really on the business case and the elements that I gave to you. So, I can’t give you the exact numbers on the loyalty.

However, in our interaction with our clients was that they said that it's the opportunity to give this personalized experience in a relatively inexpensive way. We always use some clients as the real best practice on how can you integrate your online and offline shopping experience.

So for instance, for us, Burberry is one of the stars in having a very integrated omni channel experience. What we see beside the business case effects that we just discussed is that they said the fact that they can really have a personalized conversation when somebody enters the store, with data already up front, gives high value. However, we didn't measure it.

I have a very good case in The Netherlands. There was a very large retailer that went bankrupt on December 31. They had 10,000 employees, and on the verge of the new year they got to hear that they are unemployed. They were one of the oldest big retailers in The Netherlands, big department store.

I've visited that department store a lot. The issue always was that when I came to the floor, there were no people that came to help me. They didn't come to advise me. They didn’t come to assist me. When I finally grabbed a product to buy, I had to stand in a big line, because there were only a few cash registers on this very big floor.

Technology is not threatening that. If you apply it in the right way, you strengthen it.

It’s a very bold statement, but I think their future would have been much brighter if somebody would have approached me and already knew that I bought something because they have a loyalty card and they knew what I bought in the past. They knew what my interests were. And they could have greeted me and said, "Mr. Wammes, it's so good that you're here again. Can I show you around because I noticed that you marked it as interest on our online store and let me show you?"

I could buy it from that person as well, because they have this integrated credit card mechanism attached to their tablet. That would really be a complete transformation of doing business in that department store. If so, 10,000 employees wouldn't have had that bad message at the end of the year.

Gardner: You're basically saying that the personal touch in the retail environment is empowered now and can come back. We've all noticed in the past years, even decades, that the amount of personalization, personal touch, and human interaction in sales has gone down; it's very much self-service. If it remains self-service, what's the difference between online and bricks and mortar? Not very much. So you really with this capability, this Extreme set of Apps bringing the relevant nature of person-to-person sales and service interactions back into vogue -- and making it very economically powerful.

Wammes: Exactly. You've hit the nail, as we say in The Netherlands. One of my colleague said it's all about relevant personal experience, and it should be relevant personal experience. Technology is not threatening that. If you apply it in the right way, you strengthen it. And I think that's really where we can have a great omni-channel, relevant personal experience delivered towards the consumer.

Gardner: We're just about out of time. I just want now for a brief moment look to the future. Now that we've taken this significant step into Extreme Apps for Retail, what comes next? What might we consider the next chapters in being able to leverage these capabilities around real-time, vast data being brought to bear, fast APIs for implementation and delivery of the visualization and other data, and then this newfound empowerment of that salesperson, that personal advisory service, at the retail outlet? What might we expect in the next months and years?

More artificial intelligence

Wammes: Well, let me start far in the future and then bring it back a little bit. If I go far to the future, bringing in even more artificial intelligence (AI) will not only even enhance the creation of strong algorithms that increase this relevant personal experience, but also AI, in contrast, will give robotics a chance to interact with us.

There are already some examples, for instance, robots driving around in airports to help people along the journey. But the sales agent will be supported by AI to give more relevant personal experience towards our client. AI is definitely something that will kick in in the coming years.

The roll-out of beacon technology, so that we really can recognize the individual consumer, is something that will be more broadly explored in the coming years in the industry.

The most powerful part of the solution is that we put a toolset into the hands of people who, in the past, were always limited by the IT department.

We've seen a lot of companies talk about big data, but a lot of retailers are still struggling a little bit with how to really apply it? What we've seen is with the clients who implemented the Extreme Apps for Retail is that because people were exposed to the enormous power of what in-memory, big data solutions can bring, all of a sudden the imagination is awakened.

In some of the examples that I gave earlier people said, "If you have this data anyway, can you then give us some very nice visual analytics to use that?" The most powerful part of the solution is that we put a toolset into the hands of people who, in the past, were always limited by the IT department, because it was difficult to build, it costs lot of money, and was very difficult to maintain.

With the new technologies, it's very easy to create stuff that is very visual and powerful. Therefore, the imagination becomes the limit of what we can do. That's perhaps the most surprising part, and that’s the thing I can't answer, because I don't know yet what kind of things people will come up with. But we're entering an area where imagination becomes a driving force of the things that we can do.

Gardner: For those who are reading or listening to our conversation today, if they want more information about how to learn about this to start the journey towards understanding how it might benefit their organization, where would you point them?

Wammes: First of all, they always can contact me at frank.wammes@capgemini.com or go to my Twitter account, @fwammes.

If you go to the Capgemini site, there's a section called Ready2Series, and Ready2Series is the solutions where Capgemini owns their own IP. Under the Ready2Series, you'll find more information about the Extreme Apps, and you can learn more from the solutions that we have there (https://www.capgemini.com/sap/sap-hana/extreme-applications-for-retail)

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HPE and Capgemini Collaborate
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Gardner: I'm afraid we'll have to leave it there. We've been discussing how technology providers have teamed as an ecosystem to develop new dynamic and rapid analysis capabilities for the retail industry. And we've seen how the Extreme Apps for Retail Initiative puts new knowledge in the hands of on-site sellers to the customized benefit of shoppers at the very point of sale and in real- time.

So please join me in thanking Frank Wammes,Chief Technology Officer for Continental Europe for Capgemini. Thanks so much, Frank.

Wammes: Thank you, Dana.

Gardner: And I'd also like to thank our audience for joining this Voice of the Customer big data use case discussion. I’m Dana Gardner, Principal Analyst at Interarbor Solutions, your host for this ongoing series of Hewlett Packard Enterprise-sponsored interviews. Thanks again for listening, and do come back next time.

Listen to the podcast. Find it on iTunes. Get the mobile app. Download the transcript. Sponsor: Hewlett Packard Enterprise.

Transcript of a discussion on how technology providers have teamed as an ecosystem to develop new dynamic and rapid analysis capabilities for the retail industry. Copyright Interarbor Solutions, LLC, 2005-2016. All rights reserved.

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How Capgemini's UK Financial Services Unit Helps Clients Manage Risk Using Big Data Analysis

Transcript of a sponsored BriefingsDirect podcast on how HP tools are helping companies harness big data to provide better risk assessment.

Listen to the podcast. Find it on iTunes. Download the transcript. Sponsor: HP.

Dana Gardner: Hello, and welcome to the next edition of the HP Discover Podcast Series. I’m Dana Gardner, Principal Analyst at Interarbor Solutions, your host and moderator for this ongoing sponsored discussion on IT innovation and how it’s making an impact on people’s lives.

Gardner

Once again, we’re focusing on how companies are adapting to the new style of IT to improve IT performance and deliver better user experiences, and business results. This time, we’re coming to you directly from the recent HP Discover 2013 Conference in Barcelona.

We’re here to learn directly from IT and business leaders alike how big data, mobile, and cloud, along with converged infrastructure are all supporting their goals.

Our next innovation case study interview highlights how Capgemini's Financial Services Global Business Unit in the United Kingdom is using big data and analysis to help its organization clients better manage risk.

To tell us more about how they do that, we're joined by Ernie Martinez, Business Information Management Head at the Capgemini Financial Services Global Business Unit in London. Welcome Ernie.

Ernie Martinez: Thank you. Glad to be here.

Gardner: Ernie, risk has always been with us. I suppose it will always remain with us in some fashion or another. Is there anything new, pressing, or different about the types of risks that your clients are trying to reduce and understand in this climate and market?

Martinez

Martinez: As you said, risk has always been with us. I don't think it's as much about what's new within the risk world, as much as it's about the time it takes to provision the data so companies can make the right decisions faster, therefore limiting the amount of risk they may take on in issuing policies or taking on policies with new clients.

Gardner: In addition to the risk issue, of course, there is competition. The speed of business is picking up, and we’re still seeing difficult economic climates in many markets. How do you step into this environment and find a technology that can improve things? What have you found?

Martinez: There is the technology aspect of delivering the right information to business faster. There is also the business-driven way of delivering that information faster to business.

Bottom up

Why Capgemini and our business information management (BIM) practices jumped in with a partnership with HP and Vertica in the HAVEn platform is really about the ability to deliver the right information to business faster from the bottom up. That means the infrastructure and the middleware by which we serve that data to business. From the top down, we work with business in a more iterative fashion in delivering value quickly out of the data that they are trying to harvest.

Gardner: Capgemini is a large global organization. Perhaps you could tell us a bit about what your unit does and the types of clients you have.

Martinez: The BIM practice is a global practice. We’re ranked in the top upper right-hand quadrant in Gartner as one of the best BIM practices out there with about 7,000 BIM resources worldwide.

Our focus is on driving better value to the customer. So we have principal-level and senior-level consultants that work with group-level CEOs in the financial services, insurance, and capital markets arenas. Their main focus is to drive a strategy and roadmap, consulting work, enterprise information architecture, and enterprise information strategy with a lot of those, the COO- and CFO-level customers.

We then drive more business into the technical design and architectural way of delivering information in business intelligence (BI) and analytics. Once we define what the road to good looks like for an organization, when you talk about integrating information across the enterprise, it's about what is that path to good looks like and what are the key initiatives that an organization must do to be able to get there.

This is where our technical design, business analysis, and data analysis consultants fit in. They’re actually going in to work with business to define what do they need to see out of their information to help them make better decisions.

Learn more about the HP+Capgemini CIRA Solution

To get a product demonstration, send an email to:

HAVEnAlliancesMarketing@HP.com

Gardner: Of course, the very basis of this is to identify the information, find the information, and put the information in a format that can be analyzed. Then, do the analysis, speed this all up, and manage it at scale and at the lowest possible cost. It’s a piece of cake, right? Tell us about the process you go through and how you decide what solutions to use and where the best bang for the buck comes from?

Martinez: Our approach is to take that senior-level expertise in big data and analytics, bring that into our practice, put that together with our business needs across financial services, insurance, and capital markets, and begin to define valid use cases that solve real business problems out there.

We’re a consulting organization, and I expect our teams to be able to be subject matter experts on what's happening in the space and also have a good handle on what the business problems are that our customers are facing. If that’s true, then we should be able to outline some valid use cases that are going to solve some specific problems for business customers out there.

In doing so, we’ll define that use case. We’ll do the research to validate that indeed it is a business problem that's real. Then we’ll build the business case that outlines that if we do build this piece of intellectual property (IP), we believe we can go out and proactively affect the marketplace and help customers out there. This is exactly what we did with HP and the HAVEn platform.

Wide applicability

Gardner: So we’re talking about a situation where you want to have wide applicability of the technology across many aspects of what you are doing, that make sense economically, but of course it also has to be the right tool for the job, that's to go deep and wide. You’re in a proof-of-concept (POC) stage. How did you come to that? What were some of the chief requirements you had for doing this at that right balance of deep and wide?

Martinez: We, as an organization, believe that our goal as BI and analytics professionals is to deliver the right information faster to business. In doing so, you look at the technologies that are out there that are positioned to do that. You look at the business partners that have that mentality to actually execute in that manner. And then you look at the organization, like ours, whose sole purpose is to mobilize quickly and deliver value to customer.

I think it was a natural fit. When you look at HP Vertica in the HAVEn platform, the ability to integrate social media data through Autonomy and then of course through Vertica and Hadoop -- the integration of the entire architecture -- gives us the ability to do many things.

But number one, it's the ability to bring in structured and unstructured data, and be able to slice and dice that data in a rapid fashion; not only deploy it, but also execute rapidly for organizations out there.

Being here at HP Discover this week has certainly solidified in my mind that we’re betting on the right horse.

Over the course of the last six months of 2013, that conversation began to blossom into a relationship. We all work together as a team and we think we can mobilize not just the application or the solution that we’re thinking about, but the entire infrastructure derivatives to our customers quickly. That's where we’re at.

What that means is that once we partnered and got the go ahead with HP Vertica to move forward with the POC, we mobilized a solution in less than 45 days, which I think shows the value of the relationship from the HP side as well as from Capgemini.

Gardner: Down the road, after some period of implementation, there are general concerns about scale when you’re dealing with big data. Because you’re near the beginning of this, how do you feel about the ability for the platform to work to whatever degree you may need?

Martinez: Absolutely no concern at all. Being here at HP Discover has certainly solidified in my mind that we’re betting on the right horse with their ability to scale. If you heard some of the announcements coming out, they’re talking about the ability to take on big data. They’re using Vertica and the HAVEn network.

There’s absolutely zero question in my mind that organizations out there can leverage this platform and grow with it over time. Also, it gives us the ability to be able to do some things that we couldn’t do a few years back.

Business value

Gardner: Ernie, let's get back to the business value here. Perhaps you can identify some of the types of companies that you think would be in the best position to use this. How will this hit the road? What are the sweet spots in the market, the applications you think would be the most urgently that make a right fit for this?

Martinez: When you talk about the largest insurers around the world, whether from Zurich to Farmers in the US to Liberty Mutual, you name it, these are some of our friendly customers that we are talking to that are providing feedback to us on this solution.

We’ll incorporate that feedback. We’ll then take that to some targeted customers in North America, UK, and across Europe, that are primed and in need of a solution that will give them the ability to not only assess risk more effectively, but reduce the time to be able to make these type of decisions.

Reducing the time to provision data reduces costs by integrating data across multiple sources, whether it be customer sentiment from the Internet, from Twitter and other areas, to what they are doing around their current policies. It allows them to identify customers that they might want to go after. It will increase their market share and reduce their costs. It gives them the ability to do many more things than they were able to do in the past.

It allows them to identify customers that they might want to go after. It will increase their market share and reduce their costs.

Gardner: And Capgemini is in the position of mastering this platform and being able to extend the value of that platform across multiple clients and business units. Therefore, that reduces the total cost of that technology, but at the same time, you’re going to have access to data across industries, and perhaps across boundaries that individual organizations might not be able to attain.

So there's a value-add here in terms of your penetration into the industry and then being able to come up with the inferences. Tell me a little bit about how the access-to-data benefit works for you?

Martinez: If you take a look at the POC or the use case that he POC was built on, it was built on a commercial insurance risk assessment. If you take a look at the underlying architecture around commercial insurance risk, our goal was to be able to build an architecture that will serve the uses case that HP bought into, but at the same time, flatten out that data model and that architecture to also bring in better customer analytics for commercial insurance risk.

So we’ve flattened out that model and we’ve built the architecture so we could go after additional business, instead of more clients, across not just commercial insurance, but also general insurance. Then, you start building in the customer analytics capability within that underlying architecture and it gives us the ability to go from the insurance market over to the financial services market, as well as into the capital markets area.

Gardner: All the data in one place makes a big difference.

Martinez: It makes a huge difference, absolutely.

Future plans

Gardner: Tell us a bit about the future. We’ve talked about a couple of aspects of the HAVEn suite. Autonomy, Vertica, and Hadoop seem to be on everyone's horizon at some point or another due to scale and efficiencies. Have you already been using Hadoop, or how do expect to get there?

Martinez: We haven’t used Hadoop, but certainly, with its capability, we plan to. I’ve done a number of different strategies and roadmaps in engaging with larger organizations, from American Express to the largest retailer in the world. In every case, they have a lot of issues around how they’re processing the massive amounts of data that are coming into their organization.

When you look at the extract, transform, load (ETL) processes by which they are taking data from systems of record, trying to massage that data and move it into their large databases, they are having issues around load and meeting load windows.

The HAVEn platform, in itself, gives us the ability to leverage Hadoop, maybe take out some of that processing pre-ETL, and then, before we go into the Vertica environment, be able to take out some of that load and make the Vertica even more efficient than it is today, which is one of the biggest selling points of Vertica. It certainly is in our plans.

This is a culture that organizations absolutely have to adopt if they are going to be able to manage the amount of data at the speed at which that data is coming to their organizations.

Gardner: Another announcement here at Discover has been around converged infrastructure, where they’re trying to make the hardware-software efficiency and integration factor come to bear on some of these big-data issues. Have you thought about the deployment platform as well as the software platform?

Martinez: You bet. At the beginning of this interview, we talked about the ability to deliver the right information faster to business. This is a culture that organizations absolutely have to adopt if they are going to be able to manage the amount of data at the speed at which that data is coming to their organizations. To be able to have a partner like HP who is talking about the convergence of software and infrastructure all at the same time to help companies manage this better, is one of the biggest reasons why we're here.

We, as a consulting organization, can provide the consulting services and solutions that are going to help deliver the right information, but without that infrastructure, without that ability to be able to integrate faster and then be able to analyze what's happening out there, it’s a moot point. This is where this partnership is blossoming for us.

Gardner: Before we sign off, Ernie, now that you have gone through this understanding and have developed some insights into the available technologies and made some choices, is there any food for thought for others who might just be beginning to examine how to enter big data, how to create a common platform across multiple types of business activities? What did you not think of before that you wish you had known?

Lessons learned

Martinez: If I look back at lessons learned over the last 60 to 90 days for us within this process, it’s one thing to say that you're mobilizing the team right from the bottom up, meaning from the infrastructure and the partnership with HP, and as well as the top-down with your business needs to finding the right business requirements and then actually building to that solution.

In most cases, we’re dealing with individuals. While we might talk about an entrepreneurial way of delivering solutions into the marketplace, we need to challenge ourselves, and all of the resources that we bring into the organization, to actually have that mentality.

What I’ve learned is that while we have some very good tactical individuals, having that entrepreneurial way of thinking and actually delivering that information is a different mindset altogether. It's about mentoring our resources that we currently have, bringing in that talent that has more of an entrepreneurial way of delivering, and trying to build solutions to go to market into our organization.

Learn more about the HP+Capgemini CIRA Solution

To get a product demonstration, send an email to:

HAVEnAlliancesMarketing@HP.com

I didn’t really think about the impact of our current resources and how it would affect them. We were a little slow as we started the POC. Granted, we did this in 45 days, so that’s the perfectionist coming out in me, but I’d say it did highlight a couple of areas within our own team that we can improve on.

Gardner: So, it’s important to either identify or find a culture of innovation?

Martinez: That's correct.

Gardner: Well, great. I am afraid we’ll have to leave it there. We’ve been talking about how the Capgemini Financial Services Global Business Unit has been entering into a proof-of-concept phase around big data and some of the choices that they have been making. I want to thank our guest, Ernie Martinez, the Business Information Management Head at Capgemini Financial Services Global Business Unit in London. Thank you, Ernie.

Martinez: Thanks, Dana. I appreciate your time.

Gardner: Thank you to our audience as well for joining us for this special new style of IT discussion coming to you directly from the HP Discover 2013 Conference in Barcelona.

I’m Dana Gardner, Principal Analyst at Interarbor Solutions, your host for this ongoing series of HP sponsored discussions. Thanks again for listening, and come back next time.

Listen to the podcast. Find it on iTunes. Download the transcript. Sponsor: HP.

Transcript of a sponsored BriefingsDirect podcast on how HP tools are helping companies harness big data to provide better risk assessment. Copyright Interarbor Solutions, LLC, 2005-2014. All rights reserved.

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Capgemini's CTO on Why Cloud Computing Exposes the Duality Between IT and Business

Transcript of a BriefingsDirect podcast in conjunction with latest The Open Group Conference in San Francisco. Capgemini CTO Andy Mulholland discusses the transformed enterprise.

Listen to the podcast. Find it on iTunes/iPod. Download the transcript. Sponsor: The Open Group.

Register for The Open Group Conference
Jan. 30 - Feb. 3 in San Francisco.

Dana Gardner: Hello, and welcome to a special BriefingsDirect thought leadership interview series coming to you in conjunction with The Open Group Conference this January in San Francisco. I'm Dana Gardner, Principal Analyst at Interarbor Solutions and I will be your host throughout these discussions.

The conference will focus on how IT and enterprise architecture support enterprise transformation. Speakers in conference events will also explore the latest in service oriented architecture (SOA), cloud computing, and security.

We’re here now with one of the main speakers of the conference, Andy Mulholland, the Global Chief Technology Officer and Corporate Vice President at Capgemini. In 2009, Andy was voted one of the top 25 most influential CTOs in the world by InfoWorld. And in 2010, his CTO Blog was voted best blog for business managers and CIOs for the third year running by Computer Weekly.

As a lead-in to his Open Group conference presentation on the transformed enterprise, Andy and I drill down on one of the year’s hottest technology and business trends: cloud computing.

Capgemini has published a white paper on cloud computing. It draws distinctions between what cloud means to IT, and what it means to business -- while examining the complex dual relationship between the two.

To find out more about these two cloud imperatives, please join me now in welcoming Andy Mulholland, Global Chief Technology Officer at Capgemini. Welcome back to BriefingsDirect, Andy. [Disclosure: The Open Group is a sponsor of BriefingsDirect podcasts.]

Andy Mulholland: Hi, and thank you very much for inviting me.

Gardner: My pleasure. I really enjoyed reading a preview of this white paper. I read it with great interest, and what jumps out at me this duality. Why do business people think they have a revolution on their hands, and yet IT people look at as an evolution, something about efficiency of infrastructure?

Mulholland: Well, that’s because we define the role of IT and give it the responsibility and the accountability in the business in a way that is quite strongly related to internal practice. It’s all about how we manage the company’s transactions, how we reduce the cost, how we automate business process, and generally try to make our company a more efficient internal operator.

When you look at cloud computing through that set of lenses, what you’re going to see is how I can use it in that model. Some of the technologies from cloud computing, principally virtualization, give you ways to improve how you deliver the current cloud server-centric, application-centric environment.

So you see there’s an evolution, and you start asking questions about how far can we go: Would I go outside and put enterprise applications on the cloud? Would I maybe run a private cloud internally? Etc.

However, when the business people want to talk about that subject, they tend to talk about it and reflect on it in terms of the change in society and the business world, which we all ought to recognize because that is our world, around the way we choose what we buy, how we choose to do business with people, how we search more, and how we’ve even changed that attitude.

Changed our ways

There's a whole list of things that we simply just don’t do anymore because we’ve changed the way we choose to buy a book, the way we choose and listen to music and lots of other things.

So we see this as a revolution in the market or, more particularly, a revolution in how cloud can serve in the market, because everybody uses some form of technology.

So then the question is not the role of the IT department and the enterprise -- it’s the role technology should be playing in their extended enterprise in doing business.

Gardner: In the paper, it describes the IT view of cloud as "inside-out" -- so their IT-centric world, their legacy, their requirements, what they view as their mission, and how to project that outward. And then the term it uses for the business side that you just described is "outside-in." That is to say, beyond the perimeter of IT, beyond the perimeter of the business.

How is it these seemingly disjointed and confusing approaches can come together? Is there a need for them to somehow mesh and be aligned?

Mulholland: Most businesses ought to be aligned in their operations or it becomes quickly quite a problem. But if we just pick up the terms, which we used as ways to define the first word, the function inside is the primary function, and out is the secondary function, and the other way around.

Most businesses ought to be aligned in their operations or it becomes quickly quite a problem.

IT is clearly internally focused. When we look at what we do outside the firewall, we define it on the governance, security, and the risk structure of inside IT. In other words, we're worried about the exported information. We're worried about who comes through the firewall and under what circumstance. And we’re worried that when you go out with your corporate machine in the big wide world, someone might steal it with data on it.

Alternatively, you might be unfortunate enough on the Internet to pick up some nasty malware that could have some bad effects. For all of those reasons, we put very heavy governance and restrictions on PCs. They usually lock down more than only one control, but when we go outside, we’d like to hear there’s a virtual private network (VPN) to reincorporate inside the firewall for safety.

By definition, we have a way around outside-in. People are saying, well no, actually, I require very little about the internal world. I'm very focused on the external world. Obviously, that serves people, service engineers, but actually it’s quite a lot of people.

The small joke there is that people don’t buy iPads in order to get better use of enterprise IT. They buy iPads to escape the limitations of enterprise IT, because that's fundamentally working on the web outside, with very limited internal links.

When I’m out on the road, there are four services I use from Capgemini. All of them are web-mounted. I simply don’t use a VPN connection, and I don’t use a lock-down machine during the day. I tend to do it in the evenings or in the early mornings, when I have to do things that are about the more sensitive side of our operations.

The rest of the day, web-based, push email works really well on my iPad. Not to give particularly advert for that, but I also use a Windows phone. I also use social networking system, and I use a knowledge management system, and I use time and expenses recording systems.

The outside world

All of them enable me to function in the outside world without a number of restrictions. Why? Because the primary task I have is to work with industry partners, clients, and various teams based on other people’s sites. All of that is about how I function in the outside world.

Now when we take an interesting example of that: customer relationship management (CRM). You can see very clearly CRM has meant how the company keeps its sales funnel, its clients, and other things inside its IT, transacts it, secures it, and grinds it into business information so it knows where it is.

Today, we talk about social CRM and when we talk about social CRM, we mean it's outside-in. We mean it's sales people using packages that can look at the person they’re selling to, find all the information about them by looking at various social sites. They can exchange through collaboration and knowledge, and share in social networks with their colleagues, any information about the account that's known or whatever is happening. In other words, it becomes an external task.

Now the two sides clearly exist together because you must keep your funnel up. You must know what’s happening. You must keep the internal clients. The other way around, the sales people want to exploit insights of what’s happening that they can gain from very different directions than classic internal structured information.

Gardner: So there are some significant advantages to users like yourself to pursue outside services, recognizing that they can get process innovation, data sharing or transference. There's an opportunity to engage with partners. At the same time, IT still needs to be mindful of its mission around security and protection.

They slowly, but surely, destroyed the business integrity of the data by all having different versions.

So I'm wondering again, not so much alignment, but somebody has to bend. Does IT need to go thinking more "outside," or do the folks who are doing these outside activities need to think more about IT? How can they meet up in the middle somewhere?

Mulholland: Now we’re back to your point about enterprise transformation and what that really means. I'm always very conscious of the fact that the phrase has been used for a long time in a variety of ways, as have many of the other buzzwords that go with it.

But this time, what we actually mean is that -- as with the last wave of where the big technology changed in late 80s and early '90s, when we brought in the PC, there is almost a direct correlation between the two [trends]. Business people brought in PCs, because they could use spreadsheet and could be more insightful in their use of information, such as it was at that time.

But what happened was that they slowly, but surely, destroyed the business integrity of the data by all having different versions. Where we went to with that was two things. We went to enterprise resource planning (ERP), which was one version of the truth. But the really important point was that we started to redesign around business process reengineering to flow all the process across the organization. Not that we had separate isolated departments, but the question was how do we flow across.

That was quite difficult at that time because it presented a lot of command and control problems. In fact, email was brought in as the answer, because you needed the names of the people along the process and you could do command and communication along the process, even if in the previous structure, department organization hadn’t fit.

Business transformation

That was a business transformation at that time. It was a transformation around the way we organized our business to do business. From that, we organized our business model to be based on that.

So we use phrases like "do more with less," "concentrate on one or two or three lines where you're the number one or two in the market," etc. That was a very clear business transformation in the way we do business, the way we organize our business, and our business models.

Two of the most popular books recently, include Seizing the White Space, which argues that in the past, it was difficult to transfer your business model too far. I use an example, Amazon. If they sold books, they could sell DVDs, because fundamentally the same business process supported both. But in Seizing the White Space, a popular book on Harvard Business Press, it defines for a lot of people 19 new business models that their enterprise could adopt.

It defined the idea that actually they could do something like Amazon Web Services, where how they service the market was distinctly different from how they ran their business process and created an invoice.

A more popular book more recently has been The Power of Pull, and in all of these, the idea is that we’re really seeing a decentralization of the front office in order to respond to and follow the market and the opportunities and the events in very different ways.

That was a very clear business transformation in the way we do business, the way we organize our business, and our business models.

The Power of Pull says that I do what my market is asking me and I design business process or capabilities to be rapidly orchestrated through the front office around where things want to go, and I have linkage points, application programming interface (API) points, where I take anything significant and transfer it back.

Most of the major technology players in the software industry are pretty advanced with this in the way that they're supporting their current application-centric IT environment, developing a new environment in front of that, and offering middleware and mix the two together.

But the real challenge is -- and it was put to me today in a client discussion -- that their business was designed around 1970 computer systems, augmented slowly around that, and they still felt that. Today, their market and their expectations of the industry that they're in were that they would be designed around the way people were using their products and services and the events and that they had to make that change.

To do that, they're transformed in the organization, and that's where we start to spot the difference. We start to spot the idea that your own staff, your customers, and other suppliers are all working externally in information, process, and services accessible to all on an Internet market or architecture.

So when we talk about business architecture, it’s as relevant today as it ever was in terms of interpreting a business.

Set of methodologies

But when we start talking about architecture, The Open Group Architectural Framework (TOGAF) is a set of methodologies on the IT side -- the closed-coupled state for a designed set of principles to client-server type systems. In this new model, when we talk about clouds, mobility, and people traveling around and connecting by wireless, etc., we have a stateless loosely coupled environment.

The whole purpose of The Open Group is, in fact, to help devise new ways for being able to architect methods to deliver that. That's what stands behind the phrase, "a transformed enterprise."

Gardner: All right. So we certainly have a strong case for transformation being necessary and pressing, especially as organizations try to react to their very dynamic markets, accommodate them, and then to try to tool the means of orchestrating the processes and supporting those new market requirements.

At the same time, Andy, there's some added complexity in that, the external landscape has shifted when we think about things like mobility, which means any connection, any device, any service. Also, when we think about cloud, which is compute and development resources, as well as past and present IT resources on demand, and then we think about big data -- so real-time information and intelligence as well as greatly improved efficiencies around storage and search.

Then, I suppose, the last big variable to consider in this mix is the external economic environment. The timing is that most organizations are still facing reduced spending. They have also expectations from the customers that are more demanding.

Most organizations are still facing reduced spending. They have also expectations from the customers that are more demanding.

So, given the fact that we’ve identified the need, how can we leverage these changes in the market -- things like mobility, cloud, big data, and the requirements around efficiency and productivity -- to spur the enterprise forward?

What do we need to start doing differently that was not the same as in the early 90s with business process reengineering?

Mulholland: Let’s go back again to the conversation this morning with a client. It’s always interesting to touch reality. This particular client is looking at the front end of a complex ecosystem around travel, and was asked this standard question by our account director: Do you have a business case for the work we’re discussing?

The reply from the CEO is very interesting. He fixed him with a very cold glare and he said, "If you were able to have 20 percent more billable hours without increasing your cost structure, would you be bothered to even think about the business case?"

The answer in that particular case was they were talking about 10,000 more travel instances or more a year -- with no increase in their cost structure. In other words, their whole idea was there was nothing to do with cost in it. Their argument was in revenue increase, market share increase, and they thought that they would make better margins, because it would actually decrease their cost base or spread it more widely.

That's the whole purpose of this revolution and that's the purpose the business schools are always pushing, when they talk about innovative business models. It means innovate your business model to look at the market again from the perspective of getting into new markets, getting increased revenue, and maybe designing things that make more money.

Using technology externally

We're always hooked on this idea that we’ve used technology very successfully internally, but now we should be asking the question about how we’re using technology externally when the population as a whole uses that as their primary method of deciding what they’re going to buy, how they’re going to buy it, when they’re going to buy it, and lots of other questions.

If we go back to the basic mission of The Open Group, which is boundarylessness of this information flow, the boundary has previously been defined by a computer system updating another computer system in another company around traditional IT type procedural business flow.

Now, we’re talking about the idea that the information flow is around an ecosystem in an unstructured way. Not a structured file-to-file type transfer, not a structured architecture of who does what, when, and how, but the whole change model in this is unstructured.

It’s a model around big data, saying that there is information everywhere. How do I get the insight I want from it? And when I’ve got the insight I want from it, which is more driven by search than ever was driven by queries in the old landscape, how and where do I use it? In other words, how do I start to evoke a process between different companies?

Let’s just reiterate this whole theme about clouds, mobility, and so on, in a very simple way. It is actually the fourth generation of the Internet. Some people will talk about it being the third because they will miss out one of the stages. I would say it’s the fourth for the following reason.

Web 2 is quite important, because it showed us that actually we are focused upon people making insightful decisions, as much or more than we've ever been focused previously around the computer.

The first generation was universal connectivity. That’s what underpins mobility. The second generation was universal shared content. We could read and look at content, the beginnings of the big data model that we know today, the beginnings of the shift to the search engine model, and the way we used the big data model of the web.

The third one is sometimes not included by one or two other people. One or two of my colleagues, friends, and companies don’t always include Web 2. I think Web 2 is quite important, because it showed us that actually we are focused upon people making insightful decisions, as much or more than we've ever been focused previously around the computer.

The fourth one is that if I can connect to you, if I can see the content, if I can interact to find out that, that really is what I want to do. I ought to be able to trigger shared process. I ought to be able to trigger something that the process is from the various parties in that model. Travel, as I just said this morning, are actually able to come together to give me my version of what I want, and that includes other comments people hear about open data, etc.

If you want to see a classic example of this it's from Apple. I appreciate that I'm using Apple a lot, but I'm using it because this is relatively mature at the moment and it's pretty easy to demonstrate. Go to the Apple App Store and load iFly. If you're a frequent airline flyer, you're going to thank me a lot for this.

It takes the information which is published all the time in an open data format by various airports, airlines, etc., and consolidates it to give it a polarized view for you of the travel you're about to do. It tells you about the airport you're going to go through, you can find out what restaurants are by the gate you're going to travel from. It tells you whether the aircraft is on time/off time, how it synchronizes with the next flight you're going to make, etc.

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Transformation model

That is a transformation. When we talk about these elements, if we recombine them around this loose structured coupling to give different polarizations to the person, the situation, or the event, by combining those four factors, that’s what’s leading to the business transformation model.

Gardner: I guess it's important to point out here, Andy, that the stakes are relatively high. If you look at these issues and you think that it's a perfect storm that these are things that are too complicated, difficult to manage, you're just going to hunker down, reinforce your firewall, then this could be an existential decision.

On the other hand, like the CEO that you mentioned this morning, if you look at this as a game changing opportunity, 20 percent improvement in revenue and share, but at no additional cost, well, then this could be a game-changing beneficial approach.

How do organizations make sure they're the latter, and not the former? Who in the organization can be the change agent that can make that leap between the duality view of cloud that IT has, and these business opportunists?

Mulholland: Frankly, it's happening in most organizations already in much the same way as I said earlier. There's a direct correlation with what happened with the PC. If you go into many organizations today, and the advice I usually offer is go through the corporate credit cards and find out who is spending money with places like Amazon or Google or something like that, the answer is usually pretty shocking. It's much more than people realize.

CEOs are quite noticeably reading the right articles, hearing the right information from business schools, etc., and they're getting this picture that they're going to have new business models and new capabilities.

My point about that exercise is that the business managers on these systems -- which are relatively easy to do something quick around, like a quick spreadsheet was -- are actually already implementing and getting good results.

The other way around, the CEOs are quite noticeably reading the right articles, hearing the right information from business schools, etc., and they're getting this picture that they're going to have new business models and new capabilities. So the drive end is not hard. The problem that is usually encountered is that the IT department’s definition and role interferes with them being able to play the role they want.

What we're actually looking for is the idea that IT, as we define it today, is some place else. You have to accept that it exists, it will exist, and it’s hugely important. So please don’t take those principles and try to apply them outside.

The real question here is when you find those people who are doing the work outside -- and I've yet to find any company where it hasn’t been the case -- and the question should be how can we actually encourage and manage that innovation sensibly and successfully?

What I mean by that is that if everybody goes off and does their own thing, once again, we'll end up with a broken company. Why? Because their whole purpose as an enterprises is to leverage success rapidly. If someone is very successful over there, you really need to know, and you need to leverage that again as rapidly as you can to run the rest of the organization. If it doesn’t work, you need to stop it quickly.

Changing roles

In models of the capabilities of that, the question is where is the government structure? So we hear titles like Chief Innovation Officer, again, slightly surprising how it may come up. But we see the model coming both ways. There are reforming CIOs for sure, who have recognized this and are changing their role and position accordingly, sometimes formally, sometimes informally.

The other way around, there are people coming from other parts of the business, taking the title and driving them. I’ve seen Chief Strategy Officers taking the role. I’ve seen the head of sales and marketing taking the role.

I recognize also that there are a lot of companies where they have actually formed a whole new business division to behave differently. Again, the real example is a global company in desking systems recognizing the number of people in offices at desks is finite at best, and possibly going down, starting a division around virtual offices and supporting their employees to work away from a fixed office.

It's the same clients they're dealing with, the same customers, the same core competences. They're just reinventing a new business model to get them new revenue as there are uncertainties about the other one.

Now the question behind that was that it's clearly a business strategic decision, but there was the possibility of recognizing that it could be done, the technology existed, and the customers were changing their mind.

They're just reinventing a new business model to get them new revenue as there are uncertainties about the other one.

Certainly, recognizing the technology possibilities should be coming from the direction of the technology capabilities within the current IT department. The capability of what that means might be coming differently. So it’s a very interesting balance at the moment, and we don’t know quite the right answer.

We had CIOs who were not sure what was the right answer. Some of them came in with the PCs themselves, and some of them were business managers who took over the role and started to look to see what they could do.

So right now, I don’t know that there is a single, fixed answer. What I do know is that it’s happening and the quick-witted CIOs are understanding that it’s a huge opportunity for them to fix their role and embrace a new area, and a new sense of value that they can bring to their organization.

Gardner: So perhaps it’s going to be some organic or combination of organic and structured approaches. It could be any number of people that are the drivers in these different companies and in different verticals. I suppose what’s really important then is identifying successes, and then making them repeatable.

How do the roles, the traditional roles of the enterprise architect and the business architect come to bear on this ability to recognize successes -- the inside-out, the outside-in successes, some combination? Make them repeatable and perhaps move toward this cloud opportunity, rather than cloud as a handicap, to your company’s success?

Issuing invoices

Mulholland: Well, this goes prominently about the new world and the transformed environment, but we should never forget that all sorts of business are actually about the issuing of an invoice and proving that it was a valid invoice to an auditor.

So, that puts us firmly back in the old world. What we're really talking about is how do you move through three different recognizable layers in an organization, while remaining compliant -- the world that says we have to able to show to an auditor procedures and processes and data and methods that are all clean and good.

Then if we look above that, we have our core competencies. What is the industry we're in, and, if I put it in business jargon, what is the value that the shareholders are buying from us.

Motorcars might be an example. We have factories, skilled staff, and every detail. But in that layer, we see a very rich set of applications that enable us to, if we stick to automotives, design CAD, do things with them, etc. All we're talking about is in front of that is a new layer that asks how we differentiate.

Classic differentiation has been around brand. There's Volkswagen, Audi, Fiat and Škoda. If we take a European respective of a very successful car company, each of those brands reaches a different marketplace, and that gives them more reach than if they only had one brand.

At the back, it's very focused on the procedure, application, and data. At the front, it's very focused on orchestration of clusters of different services to seek different environments.

But that differentiation is built on the same chassis in each one of those cars. So their core competency actually gives them a core base ordered to express differentiation. Beyond that, how do the people map to the layers?

If you start looking at the business that way, you actually start this top-down. You ask where we differentiate, how do we engage with a market in a different way, or is our new business model where you look bottom up? You ask how we make sure we're issuing valid invoices?

If you check that through, that use of thread in a process that runs through from the front to the back, always has to be. At the back, it's very focused on the procedure, application, and data. At the front, it's very focused on orchestration of clusters of different services to seek different environments.

Each of those services is a definable entity with a definable task. Success starts from SOA, which frankly we didn’t do very well as an industry. It starts from the idea that we know and define each web services properly, and we define the rules in terms of how the orchestration of those can work. That’s why there is a lot of interest at the moment in business process management.

Redesigning process

What we’ve eventually done is say at the back we’ve bolted the clusters together in a monolithic application and how we integrate those together, whereas at the front, our task is actually to identify spectacular small business service elements in a very well-defined manner, so that they can be clicked together to give us the freedom to redesign process on the fly in order to adjust to this new market.

So the clarity of thinking about business, the transition of that into technology architecture has not decreased at all. In fact, if anything, it’s gotten more complicated and more interesting as we now add this new layer of business to technology architecture.

Gardner: Returning to the upcoming Capgemini white paper, it adds a sense of urgency at the end on how to get started. It suggests that you appoint a leader, but a leader first for the inside-out element of cloud and transformation and then a second leader, a separate leader perhaps, for that outside-in or reflecting the business transformation and the opportunity for what’s going on in the external business and markets. It also suggests a strategic road map that involves both business and technology, and then it suggests getting a pilot going.

We're about out of time Andy, but on this sense of urgency in getting started, as you say, a lot of these things are happening already. How does it become something that you can manage, something that you can measure that becomes something that is lower risk and more comfortable for the leadership in these organizations?

Mulholland: I usually reply to most challenges I'm given about the complexity of trying to keep everybody going in the same direction in Capgemini with one very simple answer. The question is do you know who is responsible. If you don’t, you'd better figure out how you're going to make someone responsible, because in any situation, someone has to be deciding what we're going to do and how we're going to do it.

No business can survive by going off in half-a-dozen directions at once. You won't have the money. You won't have the brand. You won't have anything you’d like.

Having defined that, there are very different business drivers, as well as different technology drivers, between the two. Clearly, whoever takes those roles will reflect a very different way that they will have to run that element. So a duality is recognized in that comment.

On the other hand, no business can survive by going off in half-a-dozen directions at once. You won't have the money. You won't have the brand. You won't have anything you’d like. It's simply not feasible.

So, the object of the strategic roadmap is to reaffirm the idea of what kind of business we're trying to be and do. That’s the glimpse of what we want to achieve. In other words, do we want to go from books into DVDs or do we want to go from DVDs into web services -- the example I gave earlier.

There has to be a strategy. Otherwise, you’ll end up with way too much decentralization and people making up their own version of the strategy, which they can fairly easily do and fairly easily mount from someone else’s cloud to go and do it today.

So the purpose of the duality is to make sure that the two roles, the two different groups of technology, the two different capabilities they reflect to the organization, are properly addressed, properly managed, and properly have a key authority figure in charge of them.

Enablement model

The business strategy is to make sure that the business knows how the enablement model that these two offer them is capable of being directed to where the shareholders will make money out of the business, because that is ultimately that success factor they're looking for to drive them forward.

Gardner: Very good. We’ve been talking with Andy Mulholland, the global chief technology officer at Capgemini. As a lead-in to his opening group presentation on the transformed enterprise, Andy and I have been exploring some of the major concepts from an upcoming Capgemini white paper on the intriguing dualities of cloud computing.

This special BriefingsDirect discussion comes to you in conjunction with The Open Group conference from January 30 to February 3 in San Francisco. You’ll hear more from Andy and many other global leaders on the ways that IT and enterprise architecture support enterprise transformation.

So thank you very much, Andy, for joining us. It's been a fascinating discussion.

Mulholland: Thank you, very much indeed. I’ve enjoyed it.

Gardner: And I look forward to your presentation in San Francisco. I also encourage our readers and listeners to register, explore, and attend the conference.

This is Dana Gardner, Principal Analyst and Interarbor Solutions, your host and moderator throughout these series of thought leadership interviews in association with the conference. Thanks to you for listening, and come back next time.

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Listen to the podcast. Find it on iTunes/iPod. Download the transcript. Sponsor: The Open Group.

Transcript of a BriefingsDirect podcast in conjunction with latest The Open Group Conference in San Francisco. Capgemini CTO Andy Mulholland discusses the transformed enterprise. Copyright Interarbor Solutions, LLC, 2005-2012. All rights reserved.

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