When we published Destination Digital last year about the changing role of the CIO, I was keen to keep the conversation going. One of the action points we suggested was to use digital technologies to enhance the consumer experience. But what might this look like in practice?
Take the example of Panera Bread, the bakery–café chain that has enhanced its already successful business model of allowing customers to tailor their salads and sandwiches. Using the latest digital technologies – and embedding the Internet of Things (IoT) throughout their operations and supply chain – Panera’s customers can now build their orders online, pre-order favourite meals with an app and pay quickly at in-store kiosks.
It’s a great example of what Gartner describes as a “business moment” – when a business spots an opportunity to blend the physical and digital worlds to drive growth. For Panera, having the ability to engage and serve their customers in new ways has made their business more relevant in the digital age.
This new focus on customer-centric experiences shows just how far the Internet of Things has come from its B2B beginnings. Whereas IoT was once just basic sensors collecting business data to inform operational tasks (fleet maintenance, for example), it is now making all types of connections between consumers, suppliers and businesses that really enhance the overall experience.
As Scott Nelson of the Harvard Business Review puts it, “the next wave [of IoT] will be led by companies who will achieve mass-market success by changing the way they develop IoT offerings, which in turn will change the way they do business”.
I think this evolution towards IoT2.0 will have implications in three key areas: people, brand and security.
Reimagining the role of people
The impact that advanced IoT is having on business models is hugely significant. Whereas IoT1.0 still required human processing to make use of the data being collected, IoT2.0 is seeing a lot more machine-to-machine connections. You could call it the Internet of Things-to-Things. So if your smart fridge detects that you’re running low on groceries, it can place an order that is fulfilled by an automated warehouse, which is then delivered by an automated drone.
The role of people is therefore greatly changing as technology improves. It is creating both pressures and opportunities across workforces and HR departments – and it will inevitably reshape modern societies around a new understanding of what it means to ‘work’. In the case of Panera, the work environment has improved. Instead of a reduction in jobs due to automation, the Panera 2.0 digital strategy has led to an increase in jobs, where employees are focused on enhancing the customer experience by offering table service.
Managing brand reputation
IoT2.0 will also impact on how organisations go about building and maintaining their brand. As the buying process shifts further from physical interactions to digital and social channels – and as digital enterprises emerge that have only ever existed online – brand reputation will increasingly be in the hands of machines.
We’ve seen precisely this in retail banking, where reputation was once built on having a familiar high street presence, but now consumers are happy to switch providers to get the latest and best offerings online. Having a clear view of this new type of value chain, and understanding the speed at which reputational damage can spread over digital channels, will have increasing importance.
Balancing security with convenience
Another impact from the rapid maturity of IoT2.0 is on security. With so much personal data being created around our buying patterns, businesses need to ensure their systems can be properly trusted by customers. Yet security mustn’t get in the way of the customer experience either. Customers want “frictionless commerce”, which 451 Research describes as “removing the step of the end user approving each specific purchase”. The security aspect must be handled behind the scenes to deliver the right experience.
My colleague, Edwin Steenvoorden, recently examined the security impacts of IoT in more depth, specifically in relation to the insurance industry, although the principles he discusses apply across all sectors.
(About the author: David Blackwood is global CTO, Capgemini Infrastructure Services. This post originally appeared on his Capgemini blog, which can be viewed here)
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