Salo Lisbon Portugal 11th e-commerce conference keynote -future trends in value driven e-commerce perspectives on organizations, processes and people_July 17 2014 _

Value driven E-commerce: Perspectives on organizations,

processes and people

Jari SaloProfessor of Marketing

Head of doctoral program

Adjunct Professor (Aalto University School of Business)

Associate Editor of Journal of Information Technology Research

Oulu Business School

University of Oulu, Finland

Department of Marketing

P.O. BOX 4600, 90014 University of Oulu • tel. (08) 553 2905, fax (08) 553 2906 • www.oulubusinessschool.fi

11th International Conference on e-Commerce 2014 17-19 July Lisbon, Portugal

© Professor Salo

Table of contents

1. Laying the foundation for Value driven electronic commerce (VDEC)

• Concept of value• VDEC: Strategy and technology perspective• VDEC: Change in organizations and processes

2. Data rich environments

3. Mobile commerce

4. Social commerce/media

5. Clouds, gamification, B2B and economics trends

6. Change in digital everyday of people


Value

Value equation = Benefits (tangible/intangible) – Costs (price, total costs)

+ CALT (comparison of alternatives)

+ Over life time evaluations (e.g. CLV)

Holds for all people - organizations, individuals and employees


Value driven electronic commerce (VDEC): People

• Not the process• Not the strategy• Not the philosophy• Not the technology• Not the organizational abilities / competencies / resources

• But, knowing who the people are and personalizing as well as delivering the digitally created and mediated experience to them


Value driven electronic commerce (VDEC): Strategic change

1. Understanding possibilities created by new technologies (location based and context aware mobile EC, social commerce/media, augmented/extended reality)

2. Understanding change in individuals experiences (customer, employee, manager)

3. Creating and leading the experience

Value driven electronic commerce (VDEC): Technological change (a)

1. Ecosystems and SW creation are developing fast (competing clouds, SW business models e.g. Paas, Laas, IaaS, SaaS, better GUIs, data analytics for big data, social and virtual worlds)

2. Understanding different digital ecosystems (platform competition, externalities, spillovers, networks, migrations and integrations). How to excel in the platform competition?

Value driven electronic commerce (VDEC): Technological change (b)

3. Rapid development and use of mobile technologies (tablet, smartphones, apps, location based SW within organization and between organizations, augmented & extended reality)

4. Public and private (company) internal data mashups (data and functionality integrated, possibility to integrate different apps/functionalities, databases to present information in one seamless service to customer (single view Dominos Pizza (Pizza builder for customers + mobile apps, Pizza Tracker).

Technological trends from 1-4 enable creation of and management of compelling experience

VDEC: Change in organizational practices (a)

• Enterprise SW - Internal performance management• Big management data (influencing employees &

managers e.g. data visualization and analytics)• From internal history data towards social behavior data• Increasing productivity of employees and industrial

partners while deepening the customer experience and lowering costs (cost to serve customers) (enterprise SW – mobile functionalities + B2B integrations)

VDEC: Change in organizational practices (b)

• Identifying relevant internal management data from different channels (use of service, posting opinions, liking & comments) and using that data to understand employees and management in order to systematically and continuously use data in influencing employee job satisfaction, effectiveness of workforce, HRM practices in general and at the same time creating positive experiences that increases workforce commitment (employee turnover decrease) while managing the overall experience chain and at the same time measuring and automating this process

VDEC: Change in process practices (a)Revenue performance management – marketing automation

• Big customer data (New segments, customers, price “found” in real-time – automatically)

• From transactional history data towards social behavior data

•Identifying relevant customer data from different channels (store visit, use of service, posting opinions, ordering, liking & comments) and using that data to understand customers in order to systematically and continuously use data in advertising, sales and marketing, branding and service management while managing the overall customer experience chain and at the same time measuring and automating this process

VDEC: Change in process practice (b):• Content marketing and customer engagement goes hand in hand

• Manage social media - listen, talk, help and deepen relationship

• Facebook is not the only place and it does not work in isolation

• From buying media space (ads in magazine, TV, YouTube or radio) and customer history analysis (i.e. traditional CRM) to creating SW that actually helps automated marketing (email alerts, mentions, active discussion, sentiment analysis, trending analysis, clicks, likes, dislikes)

• Analytics and measurement (advertisement, sales, campaign, sales funnel) linking this to CEM and automatization

Aiming to better managed customer experience

Data rich environments


Its the way we analyze and utilize data rich environments

(rather than big data itself)


Data rich environments: Organizational perspective

• Potential is obvious for managers but what kind of infrastructure is needed? How to govern / manage the exploration and exploitation of data?

• Should managers in-house or outsource data collection, analysis and action to companies like IBM? Or use in-house SAP big data analytics like eBay?

• How to manage effectively ” with cloud computing and real-time data processing” ? - Amazon


Data rich environments: Process perspective

• Who is taking care of the process? Data unit? • Who has access to the data?• How it can be utilized internally or in B2B

relationships or with government agencies?• How is data visualization / dashboards design and

utilized?


Data rich environments: Industrial perspective

• Trucks • Busses• Dumpers (e.g. used to carry iron ore in mines)

• Autonomous vehicles• Telematics (outsourced e.g. to Volvo)


General retailing example


• Lush sales team can change the

layout of their stores in response to

real-time sales data.• "Not only has this helped to tap in to the ambitious spirit of staff -

competing over which store can do best in terms of sales and performance - but it also gives them information to improve the customer experience."

• For example, if staff notice a particular bath bomb is selling well with a certain shampoo, they can change the store layout so the items are closer together.

(Source BBC)

Digital consumer tracking

• Digital economy aspect: selling digital footprint• Ethical considerations • Privacy issues• Security issues• Legal issues - who owns the footprint?


Data rich environment - researchResearch team and infrastructure issues:

•Big data computing power & storage

•Big data SW and experienced staff (data based programming skills etc.)

•Time-series analysis / econometric modelling researchers

•Data visualization techniques

•Data rich environment analytics SW (Campalyst, Klout, SAS, SAP, IBM etc.)

•Theoretically interesting and relevant questions?


Mobile commerce


Management view

• What is value of mobile?• What are the costs and revenues in mobile are IT

leaders pondering?• Mobile browsing (pads + other devices) and

popularity of apps• Bring your own device (BYOD)


Business potential

• Apps are used to drive content and services to customers (B2C/B2B)

• Using data rich environment which is collated via apps can drastically improve value to consumers.

• Businesses that develop data tracking and analytics will improve delivery to customers, increasing customer loyalty and acquisition


Adapted from Gartner trends 2014

Business potential

• More efficient development and shorter PLC with cloud + integrated enterprise SW for mobile apps and services.

• Expanded user interface models including richer voice and video.

• Appification (freemium / in app purchases)


Context / location awereness

• Apple's iBeacon technology - in-store Bluetooth location trackers designed to interact with smartphones - enables retailers and app publishers to identify people individually the moment they enter a shop

• iBeacon available with many vendors

• Similar to iJack service developed by Teliasonera in early 2000 which they abandoned in 2004


Sales/deals80%

Content relevant to interest/Location 62%

Swirl 2013

Change in consumer behaviorHealth / well-being (apps)• Headspace meditation, beginners 10 day free starter program and after

that you can purchase premium content. • Another one e.g. sleep cycle alarm clock, uses iPhone movement sensor

to analyze and graph your sleeping patterns• Finnish company Moves was bought by Facebook. They monitor walk, run

and cycle movements. Also GPS is used to capture location and your routes data. Service creates sharable virtual map. Activity can be easily shared with family and friends

• Strava (cycling / running)• Run an Empire (still in crowdsourcing phase)

Easy of use still big trend

Wearable (Google Glass, smart watches Samsung, Pebble, Sony, Apple iWatch)


Research potential

• Location specific services – consumer reactions / emotions e.g. in retailing

• Are Bluetooth e.g. iBeacon services influencing consumers in the way we planned?

• What creates successful apps? Why Angry Birds, Class of Clans etc. are so popular?

• How is company internal use of mobile apps and mobilization of processes influencing bottom line? Or influence to B2B/Industrial relationships between companies?


Social commerce / media


Organizational perspective

• Social collaboration, sharing and processes are becoming more commonplace

• Who governs social commerce / media?• Digital business / marketing department? Public

relations?• Focus in internal use of social media (knowledge

sharing – social extranet / FB), customer facing or both?

• How value is measured ?


Organizational perspective


•Delta Air Lines has launched The Delta

Ticket Window, a Facebook application

that lets members find, book and share

flights via the “Book a Trip” tab on the

airline’s Facebook Page.

•The application was built to keep the

user on Delta’s Facebook Page for the

duration of the booking process, as

well as give them the opportunity to

share their booked flight with friends

Process perspective•Last month, Urban Research, a fast-growing and popular fashion, home and lifestyle retailer, launched an experiment in Tokyo’s Parco Ikebukuro.•Allows customers to stand in front of one of two 60-inch screens, select clothing items they want to try on and see themselves dressed in the products within seconds.

•Customers’ movements are represented fluidly on the screen in 3D and customers can use an integrated iPad to take pictures of themselves and share them with friends on social networks.


Process perspective

• Virtual service allows companies to sell product without the burden of managing inventory, directly from their existing e-commerce back ends.

• In the Wearable Clothing pop-up, to purchase an item, customers need only scan a QR code and click ‘buy.’

• Virtual changing is also relatively effortless for customers, saving time and lowering resistance to trying on clothes — especially among men.


Process perspective

• Social login - Facebook or other SNS enabled social commerce by given retailer

• Authenticate identities

• Pull customer information from particular SNS

• Tailor / customize in real-time the retailers website

• Social labs study showed that in 2012 only 6% of top 500 online retailers used social login


Too much of Facebook?


People perspective

• Social media addiction• Social media privacy• Trust towards companies / individuals• Selling / using digital footprint• How is analytics information used and stored?

• New mediums and their safe use devianArt, Instagram, Whatsapp, Path, Pinterest - Learnist, Medium, Impossible, Sulia, Sharebloc etc.


Research

• How are social commerce / media influencing path to purchase?

• How social influence can be commercialized?• Mobile social?• Emotions and social commerce?• Multichannel operations?• Increasing number of services and platforms?


Cloud ecosystems


Jameskaskade.com

IT is seen as service broker• Hybrid clouds (Enterprise private clouds which are build in

future interoperability with other public/private clouds in mind)

• Or minimize the use of cloud (e.g. environmental concerns - one Google search uses electricity as much as warming up a cup of tea)

• And then use the intelligence and storage of the client device• Drawback - mobile videos, mobile apps etc. require more

computing power and storage• Services that were used by IT-professionals will be available

to wider audience of employees


Adapted from Gartner trends 2014

Personal clouds

• From mobile devices and device providers to personal cloud service providers (similar to Dropbox)

• PC+ personal mobile devises are used to connect

• Access to the cloud (content stored/altered/shared) is managed securely and seamlessly with different devices that person has


Gamification


Multiple application areas• Tourism (geocaching, Foursquare)

• Music services (SongHi Entertainment) ”Bring fun of music creation to everyone” + game ”Magical Melody Match”

• Restaurants and other services (Foursquare, collect badges etc.)

• Social CRM - Industrial sales competition (country X vs. country Y) - Nokia Tires

• App games (Supercell Clash of Clans / Hay Day sold to Japanese Softbank)


Economics and B2B trends


TrendsEconomics:•Digitalization increases productivity, creates economic growth (e.g. apps+games) and increases well-being•Consumption is disconnected from material. •In agrarian society consumption is connected to material/soil and its manipulation with fertilizers which destroys nature while digital consumption is more ecofriendly (less pollution, economically viable once produced copies are ”free to produce”).

B2B:•Machine to machine internet (internet of everything)•Digitization, robotization & automatization (ABB)


Change in digital everyday of people


Change in ”digital” everyday of people?

Key question to ask - What kind of experiences are sought after in general and specifically by customers, employees, managers?

•Search online recipes - by the ingredients / goods online (Foodie.fm) delivered to your home/office•Music (Spotify)•Phone - video (Skype)•Movies, TV-series (Netflix)•Health and wellbeing (Polar activity bracelets)•Coffee machine / tea boiler with LCD display and times

What's next?



Key question to ask - What kind of experiences are sought after in general and specifically by customers, employees, managers?

•Online learning (younger generation)•Young people share sports / events of everyday to Instagram, FB and Flickr•Sharing baby pictures?•Smart houses (Bluetooth, infrared enabled devices, digital locks, fire alarms e.g. Nest Labs bought by Google)•Smart cars (telematics run by e.g. Volvo)•Routine work done by computers / robots while idea generation/ creativity left to humans (Eero Aarnio said without ideas and designs industrial machines wouldn't produce anything)


What's next?


Digital Nomads (work follows where person goes)• Working for the same company as before but leaving

country for somewhere nice (weather, cost of living) • Popular places for Finns are Thailand e.g. Chiang

Mai or Bali Indonesia• Using internet to do the work (and renting via Airbnb)• Remote connections to enterprise SW e.g. mobile

ERP/CRM/SCM/Innovation



• Privacy,

• Security,

• Trust,

• Identity theft / cheats and

• FB /SNS Addictions


Other VDEC important topics not covered specifically here:

• Open data, SW, innovation

• Crowdsourcing/funding

• Internet of everything (people, things, information, place)


To summarize

• Value is the key (increasing benefits, decreasing costs, providing better than alternative experience over life time)

• People and their experiences are to be maximized• VDEC is strategic change from ”me too” IT to value

based IT• VDEC is technological, organizational and process

change from ”lets have it” to lets use it wisely• VDEC is leveraging data rich environments to create

experiences in social, mobile and web.


Comments / questions?


[email protected]@aalto.fi+358 50 4675154