Navigating today’s rapidly changing consumer landscape, complex ecosystems, and supply chain disruptions is challenging for the Consumer-Packaged Goods (CPG), retail, and logistics industry. How can CPG, retail, and logistics firms provide personalized customer experiences that drive loyalty in these dynamic market conditions? How can they enable an insights-driven, customer-centric culture?

In the era of data-fueled customer journeys, Consumer Packaged Goods (CPG), retail, and logistics businesses are turning to digital transformation to meet rising customer expectations. That said, the maturity of retail e-commerce has also accelerated the shift toward digital transformation within the retail industry, emphasizing its importance and urgency.

Undoubtedly, digital transformation is a complex journey, fraught with a myriad of challenges, from the need for technology skill sets and data talent to the intricacies of change management and compliance. For instance, many companies find it difficult to harness the potential of emerging technologies and new digital tools due to a lack of technology skills or knowledge, thereby hindering their transformation efforts.

Key barriers to successful digital transformation for CPG, retail, and logistics firms

In August 2023, EdgeVerve commissioned Forrester Consulting to conduct a custom study with 106 business and IT decision-makers from CPG, retail, and logistics firms to understand the effectiveness of digital transformation initiatives and the adoption of platform-based strategies.

The main reasons being – unlike other industries, these businesses are still at the beginning stages of digital maturity and enterprise connectivity across IT and business teams, data operations, and processes. They are also behind other industries in terms of having technical, process, and knowledge foundations to advance digital transformation.

Here are a few digital transformation challenges that hinder organizational outcomes:

How can CPG, retail, and logistics businesses overcome these barriers to deliver customer and business value? This is where embracing an AI-driven, platform-based approach comes in.

The immense potential of AI and key digital transformation use cases

Though 82% of respondents highlighted that it was critical to harness emerging technologies holistically to create customer and business value, firms remain hesitant to incorporate AI into their DX strategies due to a lack of data readiness, skill sets, and trust in AI. Due to challenges in scaling AI, whether it’s a lack of skills to develop, implement, and operate AI solutions or an inability to measure ROI associated with AI investments, CPG firms are less likely to utilize AI significantly in their DX journey.

However, firms prioritizing AI and automation capabilities stand to gain significant benefits that can augment human potential and employee productivity and, ultimately, drive CX. According to the study, improving customer experience is a central driver for 92% of surveyed CPG, retail, and logistics decision-makers in their organization’s digital transformation efforts.

As businesses start to harness the power of data, they can also make well-informed, strategic decisions across IT and business centers. This shift towards insights-driven decision-making empowers businesses to adapt to rapidly evolving market conditions and customer needs.

Below are a few use cases focusing on efficiency, better decision-making, and improved productivity:

The way forward: Adopting an AI-driven platform-based strategy to enhance enterprise connectivity and efficiency

A platform-based strategy is the way forward for CPG, retail, and logistics firms to accelerate their organizations’ digital efforts. According to the Forrester study, 69% of CPG, retail, and logistics decision-makers believe in adopting a platform-based strategy that unifies business and technology to drive growth.

Advantages of a platform-based strategy to drive DX:

In short, the current digital transformation challenges have emphasized the need to connect business, IT, and partner ecosystem by leveraging a platform-based strategy that enables to capture both business and customer value through efficiencies, insights, and growth.

FAQs

In today’s digital age, the banking and financial services (BFS) industry is undergoing a seismic shift in how it delivers personalized experiences via innovative products and services. Moreover, with evolving customer needs, going beyond traditional banking is imperative to provide unparalleled CX and drive business growth. Thus, the need for operationalizing digitization to enhance customer service is more significant than ever.

Consider this — the global digital transformation in banking and financial services is not just a trend but a massive opportunity. It is projected to reach a staggering $310.7 billion by 2032¹, a clear indication that all BFS firms must adapt and innovate.

However, many financial institutions are struggling to realize the potential of their digital transformation initiatives, with challenges ranging from operational inefficiencies to a lack of understanding of emerging technologies.

Challenges of digital transformation in banking and financial services

In August 2023, EdgeVerve commissioned Forrester Consulting to conduct a custom study with 104 business and IT decision-makers at global BFS firms to understand the effectiveness of digital transformation initiatives. Almost half of the respondents (49%) indicated that their transformation efforts have not been successful in achieving desired business outcomes.²

According to the study, here are some of the key barriers to digital transformation efforts:

Overcoming these barriers is necessary as it fuels a future where customer experience is enhanced, operational inefficiencies are eliminated, and employee experience is elevated. Moreover, the importance of connectivity cannot be overlooked. BFS firms today recognize that connectivity is indispensable to realizing value from their digital transformation and emerging tech investments. 73% said that improving enterprise connectivity across business and IT functions is a key business priority for them in the next 12 months.³ The key, thus, is AI-driven digital transformation.

The rise of AI-driven digital transformation in BFS

Did you know that BFS firms are 1.4 times more likely to invest significantly in AI initiatives?⁴ Adopting cutting-edge technologies like AI, automation, and digital operating models enables BFS firms to accelerate digitalization to drive customer value and efficiencies at scale. AI-driven digital transformation can also augment human potential, paving a new pathway for the future of work.

However, challenges in implementing and scaling AI usage can impede digital transformation efforts, from a lack of skills to develop, implement, and operate AI solutions to immature technology. But here’s the differentiator — digital leaders prioritize digital transformation by jointly leveraging digital and AI to unlock new growth. This is what sets them apart from the laggards.

According to the study, BFS firms believe AI can:

By prioritizing and implementing AI and automation capabilities, advanced BFS firms can accelerate transformation efforts, leading to enhanced CX and better data integration, enabling an insights-driven culture.

Digital transformation use cases in BFS

According to the Forrester study, with CX emerging as a top business priority for BFS firms, 74% are keen to introduce process efficiencies that ultimately drive quicker and better CX.

Below are a few digital transformations use cases that drive CX, efficiency, and compliance.

Embracing a platform-based strategy: A game-changer for banking and financial services

How can BFS firms breathe new life into their transformation journey and stay ahead in the ever-evolving digital landscape? According to the Forrester study, 58% of advanced BFS firms believe that embracing a platform-based strategy that unifies and orchestrates business and technology fosters connectivity and visibility, ultimately driving digital transformation.

Moreover, a platform-driven digital strategy is not just a tool, but a catalyst for change. It accelerates financial institutions’ connectivity, automation, and AI roadmap, thereby revolutionizing the customer experience and driving new business growth. It also provides invaluable insights for decision-making, paving the way for a successful digital transformation.

To stay ahead of growing economic concerns and the digital plight, organizations across the globe are equipping themselves for the current and future dynamic landscape. Embracing innovations like artificial intelligence (AI), cloud computing, the Internet of Things (IoT), and data analytics. Opening new avenues for growth, efficiency, and elevated customer engagement. To trace these emerging trends, this collaborative endeavour with PEX Network unveils a transformative journey, disrupting traditional operational models.

It highlights key implementation strategies that requires the careful integration of generative AI and advanced technologies with business frameworks. How innovation is harmonized with proven methodologies, offering insights into the opportunities and complexities that are woven into today’s digital transformation journey, exploring a whole new world of AI-business synthesis that awaits us.

Where are changing economic headwinds taking us?

Global geopolitical uncertainties have prompted companies to adopt a conservative approach, emphasizing cost-cutting measures until early next year at least. The prevailing sentiment is a demand for compelling business cases before venturing into new technology investments. Vineet Mehra from Maersk echoes this sentiment, highlighting that Chief Technology and Innovation Officers (CTIOs) are cautious about new technology investments, instead focusing on stabilizing and optimizing existing products to reap immediate benefits.

26% of respondents

to the PEX Network’s Global State of Process Excellence 2024 report identify “cost/budget limitations” as their top challenge, highlighting the financial pressures organizations face in today’s turbulent landscape.

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Additionally, 50 percent foresee operational excellence budgets either declining or maintaining a flat trajectory. This signals a strategic move to enhance operational excellence for organizational success. Companies are investing more in proven methods like Lean, Six Sigma, and business process management (BPM) to boost efficiency, drive innovation, and strategically position themselves for long-term success in a changing economic landscape.

Cultivating the Automation Process

Ramana Rao, the Director of GBS Intelligent Automation at Newell Brands, highlights the need to understand processes through manual workshops before thinking about automation. This involves working closely with business units to document, simplify, and standardize processes. Automation or integrating technology layers is only considered after optimizing the processes.

Peter Evans, former Director of Service and Performance Management at the LEGO Group, talks about the renewed focus on classic improvement techniques. He stresses the importance of fostering a talent-focused culture, connecting purpose to impact for sustained success amid economic uncertainties. While economic uncertainties may bring potential opportunities for operational excellence leadership, maintaining alignment with broader business objectives is crucial. Evans advises against overlooking strategic alignment and adoption of innovative technologies, in the pursuit of quick savings and improvements. The organizations should continue to embrace innovation, especially in business process automation and generative AI. These strategies have the potential to fundamentally reshape business dynamics and human-machine relationships.

Where do the operational excellence leaders stand on AI integration?

Additionally, McKinsey’s recent report estimates that generative AI, when combined with complementary technologies like workflow automation, could potentially automate 25 percent of workplace tasks. This tackles tasks currently taking up a substantial 60-70 percent of employees’ time.

Although operational excellence leaders express their eagerness to experiment with generative AI, as highlighted by PEX Network’s research, only a modest 19 percent have successfully operationalized at least one project. Despite the success demonstrated by various AI initiatives like customer service chatbots, employee self-service, and intelligent document processing, a notable portion of organizations still approach large-scale AI initiatives with caution.

A Word of Caution with AI: Safety & Ethics

Advisory board members also voiced reservations about the extensive adoption of generative AI, related to regulation, finances, cybersecurity, and ethics. A survey by Salesforce highlights scepticism, with 57 percent acknowledging the revolutionary potential of generative AI, but 59 percent questioning its accuracy, 63 percent noting biases, and 71 percent anticipating a rise in carbon footprint.

Heineken’s Lyudmila Todorovska emphasizes the need for unbiased, ethical, trustworthy, and explainable AI tools.

The general noise around AI adoption circles job losses and what new machine integration would mean among workers and the work settings. To these concerns Mr. N. Shashidhar at EdgeVerve, suggests tailoring AI models for optimal performance in enterprise contexts. Meaning that the adoption can be looked at as an opportunity for more skilled hires and seamless work administrations. Additionally, stressing benefits, like those seen with ChatGPT, and exploring secure in-house AI models.

The need of the hour

Apart from overcoming resistance to change and fear, organizations face technical, financial, and legacy system challenges hindering effective AI utilization. For this, Mr. N. Shashidhar proposes a transformative overlay through platforms. Offering a more agile and cost-effective solution that not only initiates the AI and automation journey but also maximizes value from previous digital core investments, leading to substantial long-term cost reductions. The platform-based approach to generative AI and intelligent automation strategically addresses barriers impeding widespread AI adoption.

Collaborative partnerships with platform-based vendors emerge as critical and influential in high-tech enterprises, fostering active support, engagement, and impactful training. The seamless integration of platform-based technology unlocks:

Key Understanding

In summary, the platform-based approach not only maximizes the value of the digital core but also nurtures a vision of a connected enterprise. Mr. N. Shashidhar imagines a future where humans design processes, and machines execute them precisely, shifting from the current data processing paradigm. Acknowledging the evolving landscape, ongoing human intervention in areas like loan processing ensures up-to-date AI models. He highlights AI advancements fostering more natural language interactions, driving increased adoption, and promoting diversity in the development process.

The need for diverse perspectives is crucial, in removing technology barriers to innovation. Platform-based models enhance human intelligence, turning machines into teammates. This shift focuses on what machines can be for us, not just what they can do for us.

FAQ’s