What Role Does Loyalty Play in Online Shopping?


Customer loyalty has historically been formed largely through face-to-face interactions. However, with the advent of online shopping, retailers have found it significantly harder to build brand loyalty, instead focusing on factors such as product selection, convenience and lower prices to drive revenue.

 

There’s no doubt that ecommerce channels present many advantages to retailers and consumers alike, particularly given the rise of mobile and the added accessibility and convenience it brings. At the same time, being spoiled for choice has also had its effect on the consumer market – there is now so much competition that it’s easier to lose customers than ever before.

 

Transforming new customers into brand ambassadors can be challenging when you’re working with a medium as impersonal as ecommerce. Nonetheless, by guaranteeing customer satisfaction and taking steps to acquire their trust, you’ll be in a better position to turn a new customer into someone who will happily spread the good word about your business through social networks and other platforms.

 

Customer Loyalty Is Declining

 

Being spoiled for choice in an often extremely competitive marketplace, it shouldn’t come as any surprise that customer loyalty is dropping steadily. In fact, conversion rates have dropped by 28% in the last seven years. The rapid rise of comparison shopping and the relative ease of finding alternatives online have also made it more difficult for brands to hold onto existing customers. As such, many consumers don’t even consider brand loyalty to be a significant factor in their purchase decisions.

 

To overcome this trend, retailers need to work harder to better accommodate their customers through personalized loyalty programmes and excellent online content. After all, no longer is customer loyalty just about face-to-face interactions and competitive prices.

 

How Mobile Commerce Influences Customer Loyalty

 

Mobile commerce is rapidly catching up with desktop commerce, with more than 40% of online transactions now occurring on the small screen. Online stores that don’t provide an optimal experience on smartphones will likely be losing out on a great deal of potential revenue. Additionally, some digital loyalty programmes are not nearly as effective as they’re only tailored towards desktop users, or those using physical loyalty cards.

 

Studies show that 70% of consumers will develop a better impression of a company that allows them to save a loyalty card to their smartphone. From the consumer’s perspective, mobile loyalty programmes are far more convenient, since they can present things like personalized discount cards and digital loyalty cards in-store rather than having to print something out or carry around an additional card.

 

The same study also found that 83% of consumers appreciate a personalized approach whereby they receive specific rewards and promotions for events such as birthdays and anniversaries. By demonstrating to new customers that you’re aware of their individual needs and desires, you’ll be in a much better position to retain their business. If, on the other hand, a customer feels like nothing more than just another sales statistic, they’re not likely to feel any sense of loyalty to your business.

 

The Importance of Online Content for Building Brand Loyalty

 

One of the biggest challenges with building a highly visible online brand is getting heard amongst all the noise. However, according to NewsCred Insights, 62% of millennial consumers consider meaningful online content to be a major driver in brand loyalty. Every day, millions of people, particularly those belonging to the millennial generation, turn to the web to find answers to their questions and solutions to their problems. That’s why content marketing, especially social media, have become so important. Nonetheless, many companies have yet to embrace the potential of quality, engaging and relevant content to increase their brand’s visibility and influence.

 

Millennials generally aren’t interested in receiving sales messages, hence the rapid decline of traditional advertising in recent years. Instead, they want actionable content in a variety of formats, such as social media updates and blog posts, that helps them to fulfil their goals.

 

Building an ecommerce empire is no longer about sending sales messages – it’s about building loyalty through a strong, consistent and genuinely helpful online presence. From personalised loyalty rewards to value-adding content, online retailers need to do everything they can to build and retain audiences in an increasingly crowded marketplace. It’s about a two-way, engaged conversation between retailers and customers.  

Mobile Ecommerce Trends – What Are the Numbers Telling Us


While adopting a mobile-first approach may require an extensive overhaul of your website, the benefits are undisputable. Thanks to the increasing ubiquity of smartphones and tablets, interactions with potential and existing customers can happen anywhere at any time instead of being restricted to the desktop.

 

Mobile traffic overtook the desktop around three years ago, and around 90% of consumers now keep their smartphones with them around the clock. The mobile share of the ecommerce industry continues to skyrocket, profoundly effecting the industry to the extent businesses are now more likely to talk about ‘m-commerce’ rather than e-commerce. Mobile is now the defining platform of the online shopping experience, as these trends and statistics prove:

 

Ecommerce Sales

Just a few years ago, using a smartphone for online shopping was fraught with frustration as consumers struggled to navigate the average website on the small screen. Today, mobile accounts for well over half of all web traffic, and more than 40% of e-commerce transactions now take place on smartphones or tablets. From the consumer’s perspective, mobile is more convenient for shopping, since they can browse online stores, add items to shopping carts and make payments no matter where they are.

 

Shopping Cart Abandonment

People abandon online shopping carts for all sorts of reasons, such as a lack of preferred payment and delivery options. However, easily one of the biggest impacts on shopping cart abandonment is the user experience. Try navigating an online store that’s designed primarily for use on a desktop device, and you’ll quickly see how fiddly and frustrating the experience can be. Nonetheless, despite the unprecedented rise of mobile, many e-commerce stores are still woefully outdated when it comes to user interface and functionality.

 

Studies show that almost a third of mobile shoppers will abandon their shopping carts if the experience isn’t optimized for the small screen. Given the fact that mobile commerce is growing, this clearly isn’t an opportunity that retailers can afford to miss out on.

 

Buyer Journey

Online shopping has very much become an omnichannel experience, and while desktop devices aren’t going anywhere in the foreseeable future, there are now more ways to access the web than ever before. Mobile now plays an important role at every stage of the buyer journey from initial discovery to making a transaction. In fact, the latest statistics show that sixty percent of consumers have made a purchase on a mobile device, either to pick up an item in store or order online.

 

What this statistic demonstrates is that different people like to shop in an increasing number of different ways. For example, many consumers still use mobile devices only for initial research, hence the growing popularity of mobile-friendly comparison shopping, while leaving transactions themselves to desktop devices. Others, however, prefer to use the mobile for the entire buyer journey right up to making an order. In fact, the mobile-only consumer, who doesn’t even use a desktop device, is rapidly becoming commonplace.

 

Black Friday Sales

Despite being an American tradition, Black Friday sales are rapidly gaining ground in the UK and elsewhere in the world. In the US last year, shoppers spent $3.34 billion on online shopping during Black Friday, with $1.2 billion worth of those transactions taking place on mobile devices. That presents a 33% increase over the previous year, yet again exemplifying the fact that mobile commerce is already a big thing.

 

Online shopping is now an omnichannel experience with a strong focus on the availability and convenience afforded by mobile devices.

Cybersecurity and Law Firms


Handling activities with large associated financial values such as property sales, or mergers and acquisitions, is making targeting law firms a highly attractive target for cyber criminals. Once hacked, law firms lose their most prestigious asset: their reputation. Clients will switch firms even if they just sense there is the potential risk of having personal data leaked.   Data is money, and even power.  It has to be protected at all costs.

It’s been suggested that law firms are not taking cybersecurity seriously enough and are not putting appropriate measures in place to avoid attack. Firewalls and antivirus systems may not be enough to ensure protection; clients are sometimes now asking firms to prove their cyber-security capabilities by requesting that periodic security audits and ‘ethical hacking’ exercises be carried out regularly to expose any weaknesses.

Law firms are the new target

Hackers have already breached the security systems of at least one major international law firm, transforming a long-predicted cyber espionage scenario into reality. In the US, two magic circle firms were among the top 48 firms targeted in order to gain sensitive information on mergers and acquisitions, highlighting the sophistication of hackers and their more bespoke approach to targeting firms in specific sectors or following high-profile business deals.

Yet it can be difficult to implement new cyber-security procedures within firms if senior partners do not adhere to them. For example, while firms may have policies barring the use of online storage services such as DropBox, some partners continue to use them (2).

Hacking is a growing threat

In 2014, 173 UK firms were investigated by the Information Commissioner’s Office in reference to a number of incidents that were suspected to have breached the Data Protection Act. A total of 187 incidents were recorded – 29% related to security and 26% related to the incorrect disclosure of data (5).

Victims of this rise in attacks are both big and small corporations; however, small businesses are becoming the easiest and preferred target due to a lack of security measures in place. In fact, half of last year’s cyber-attacks in the UK were directed at businesses employing fewer than 2,500 people (1).  With the majority of law firms falling within this bracket, cyber-security measures should be taken very seriously by everyone working in a law firm.

Particularly for law firms, many of the staff are decision makers, compared with other business sectors where only Managers or the Accounts department have access to important company information.  Conversely in a law firm, lawyers and partners have access to huge amounts of highly sensitive data about their clients.

Recommendations

The Metropolitan Police offers a variety of information on how to prevent firms from being hacked. The most relevant recommendations for law firms centre around protecting access to data, across: ensuring access control so that staff only have access to the files they need rather than granting company-wide access to shared folders.  Additionally, encrypting any information stored on removable media or portable devices and considering the use of systems that eliminate the need for any files to be stored on portable devices is important for controlling how and where data is stored.

In addition to this, firms should be making sure that any device connected to organisational systems, including remote working, is vetted for security. Data transmission within and beyond the firm should be secure at all ends and access rights for staff who have left the firm should be revoked immediately.  Predictably, it’s important as we know to conduct background checks on applicants, especially those who will have access to highly sensitive data – thinking about how employees could use or export data.  Are you making it too easy to quickly download all of your client information onto a hard drive?  Or are you providing adequate controls to employees who are using their own devices to record client information, such as tablets and mobiles?

Price Waterhouse Coopers also recommend to take other specific measures.  Firstly, some clients will have specific requirements around how their data is managed by the law firm.  IT Directors at law firms need to be mindful of how these requirements are adhered to over the long term so that standards remain high.

Secondly, a global law firm needs to be able to satisfy global clients on a global basis. So, sharing information across a global network in a secure way is critical, as is ensuring that data protection policies in each region are adhered to.

Finally, understanding what data you have, and where it is located is key.  With so many easily accessible cloud storage tools and USB products available, it can be a huge task to even figure out where information is stored.  Which applications have which data, who has used a USB stick to handle client data in the past year, and is anyone using DropBox or personal Microsoft and Google accounts to share information or send files?

Apart from the previous recommendations, it is also important to consider practices such as ethical hacking exercises, which are carried out from the inside to detect a firm’s weaknesses to uncover potential opportunities for hacking. One firm which is already carrying out this practice is London media specialist practice, Schillings.  The firm has recently rebranded itself as a risk consulting and technology security practice, even promoting its services to other law firms to help with penetration testing and ethical hacking exercises to test system vulnerability (1).

C24 is holding a specialist cyber-security and social engineering course that is nationally accredited and delivered by UK specialists who train police forces in cyber security.  Each place normally costs upwards of £300 ex VAT per delegate, but C24 is offering ten IT Managers, Directors or CIOs the opportunity to attend the accredited half-day course for free.

Register your interest here.

 

 

References

(1) https://www.thelawyer.com/issues/28-october-2013/cyber-security-lawyers-are-the-weakest-link/

(2) https://www.lawgazette.co.uk/practice/manda-hack-attack-on-48-elite-law-firms/5054524.article

(3) https://www.lawsociety.org.uk/news/stories/scams-against-solicitors-met-police-offer-advice-and-support-on-fraud-prevention/

(4) http://www.pwc.co.uk/industries/business-services/law-firms/insights/cyber-security-issues-facing-law-firms.html

(5) https://www.lawgazette.co.uk/practice/ico-probes-173-law-firms-over-data-protection-breaches/5048260.article

 

C24 wins European Cloud Above and Beyond Award 2016

C24 data centre hosting award

Birmingham based C24 Ltd announce their success in the European Cloud Above and Beyond Awards, held in Monaco.C24 data centre hosting award

C24 has been announced as the winners of the Cloud Above and Beyond Award at the Data Cloud Awards 2016, held in Monaco in June 2016.  In order to win the award, C24 had to demonstrate how they went above and beyond to deliver a cloud service that delivered tangible results for their customer.  The award was presented to C24 at an event in Monaco in June 2016.

C24’s entry was for a project delivered at the Arthur Terry Learning Partnership, one of the top academy consortiums in the country comprised of eight schools.  The Arthur Terry Learning Partnership (ATLP) has worked with C24 for many years and describe them as a true technology partner for their academy trust.

Following the award winning project, C24 created a case study from which Microsoft followed up with a video case study, filmed on site at ATLP.

The case study highlights staff opinion on their experiences with C24 and working together with Microsoft in order to deliver a better learning experience for students. C24 and the IT team at ATLP worked together to deliver a Microsoft Office 365 solution across the schools, which will provide them with collaboration capabilities in order to better communicate between different schools and enable improved learning experiences.

C24 believes that the ATLP and Microsoft project is a great example of a way in which technology partners can work together to add value to their customers, above and beyond delivering core tech services.  By bringing in the support of key partners such as Microsoft and HP, it enables C24 to offer more value and expertise to their customers.  This latest award is another example of their commitment to delivering exceptional technology experiences.

David Ricketts, Head of Sales and Marketing at C24 Ltd, a Six Degrees Company, said, “We are delighted to have been chosen for this award – and we are really pleased that it has highlighted the great work that the IT team at Arthur Terry are doing to improve the learning experiences of many children across the Birmingham area.”

Watch the Microsoft and C24 case study video: https://www.youtube.com/watch?v=sb2Vi_wNPUo

 

 

How EBITDA killed innovation


What kills innovation in companies?  What makes a young, growing company stop in its tracks and stay fixed there?

Often, it has something to do with EBITDA.

EBITDA is a company’s earnings before interest, taxes, depreciation, and amortisation – which helps to determine a company’s operating profitability.

Many tech companies regularly trade innovation and long-term gains for a better EBITDA measurement or to boost their share position.

But this can have disastrous long-term effects on a company’s ability to innovate.

In the tech sector, where innovation is the underlying basis of any business, being able to quickly respond to trends and changes in the market, however, unprofitable they may be in the beginning, is critical to long-term success.

Amazon is an often-cited company when it comes to innovation; refraining from generating any profits over a number of years in order to build a business which would eventually dominate its market.

This ability to think long-term and dominate a market can often be down to the funding structures in place behind the company.

Forbes reports that VC backed companies have less focus on EBITDA, instead choosing to focus on the ‘race for long term market dominance’.  Yet, private equity firms who usually come in after a VC are more conservative and risk-averse in their outlook, instead using EBITDA as a measure to determine business performance.  Finally, once the company is listed publically, there is market pressure to achieve targets and report performance to shareholders on a quarterly basis.

This stops companies from thinking about how they could invest their precious cash in innovative, blue-sky thinking.  Companies who are focused on EBITDA due to a pending merger, acquisition or are having to meet quarterly targets to satisfy shareholders, don’t have the room to take risks and instead end up stagnating, doing the same thing with the same resources; and wondering why their business isn’t flourishing or changing.

Investing for the future.

Whilst investment in innovation can impact on short-term financial goals and make the company appear less profitable, innovation is critical to making sure the company is profitable, or at the very least making sure it exists, in 2 – 3 years’ time.

Think about all the technologies that have wiped out their predecessors.  Vacuum companies who haven’t invested in cordless technology may be out of business in 2 years’ time when the market shifts to cordless devices.  Car manufacturers who haven’t spent money on R&D for electric vehicles may be a few years behind their competitors and unable to compete effectively over the next 10 years.

Too good to ignore

Without innovation, the business relies on its run-rate business – the customers who purchase now because it’s ‘what they have always done’ until a disrupter comes along and takes the decision away from them and the new alternative is too good to ignore.  In standard businesses, that rate of change could take place over 10 – 20 years.  Service led businesses could offer the same types of services for decades (i.e. lawyers, accountants) however in the technology business, your product is more damaging in the tech sector than any other industry.

This has led a number of tech businesses moving away from the pressure of quarterly earnings calls and forecasts, to concentrate on sustainably growing their business.  Dell recently took the decision to go private while it figured out its place in the new competitive world of enterprise technology and cloud.    Google also recently spun off a number of its business segments so that it could better focus on each area, and be able to invest heavily in certain businesses without hampering the performance of its run-rate search engine business.

Google also recognised that this adherence to EBITDA performance can choke creativity.  Without the room to fail and risk money on a project, great things rarely happen.

Many of the larger tech companies are even scaling back the labs which once made them great, in order to reduce operational expenditure.  Unbeknownst to many in the tech business, some of the multinational tech businesses have (or did have) large lab facilities where researchers would develop innovative new ideas; many that would not fit into the company’s portfolio but might be able to be sold off as a patent or idea elsewhere.  For instance, HP developed its print technology into high-tech skin patches that ‘print’ onto the skin rather than inject.  What inventions are we missing through our inability to focus on long term growth over short term gains?

However, a relentless focus on EBITDA goes beyond just stifling innovation, it can also seep into a company’s culture, making the persistent quest for efficiency and profitability a recipe for culture disaster.  Many next generation start-ups lose their quirky office perks once they are acquired – on a balance sheet that weekly pizza and beer session on a Friday afternoon makes little sense but on the sales floor it can make the difference between staff staying or leaving a company.

Which brings me to my final thought.  We often say that smaller companies are able to innovate quickly due to their flexibility and size – making them able to pivot and change course without tiers of management to wade through.

But maybe that ability to innovate is less to do with the structure, because after all, having the resources of an IBM or Microsoft must be an enabler to innovation.  Maybe the innovation killer is actually more to do with the fact that once a company generates a significant level of interest or revenue, the focus on its EBITDA position overshadows all of its other dynamic and entrepreneurial pursuits in favour of the share price.

 

 

Image provided courtesy of UCL.

Can corporates be disruptors? The value of partnerships


“The customers we’ve reached, the opportunities we’ve bid for and the projects we have carried out would not have been possible without our partner ecosystem.”

Startup Stock Photos
Startup Stock Photos

Partnerships hold different value for different organisations.  For a start-up desperately seeking new customers to drive their business forward, value from a partnership could mean business development and client introductions.  For a multinational corporation, the value of a partnership could be a new use for their product set, or access to innovation opportunities.

This is the beauty of partnerships – two different organisations can come together and both equally receive value – by providing each other with different support.

Corporates are seeing that partnerships with start-ups are good for business – they enable innovation and provide them with visibility into a world they haven’t had access to for years.

The Coca Cola Company is leading the way with their Coca Cola Founders program, where Coca Cola’s business challenges are put out to start-up founders to come up with solutions and ultimately create spin off companies that still work with Coca Cola.  In effect, Coca Cola is annexing its innovation and R&D departments, putting ideas into smaller, entrepreneurial companies that can leverage the support from Coca Cola, without the inhibitors and mindsets that come with larger business processes.  This enables companies to ‘stay nimble’ and respond to challenges in an entrepreneurial way, and the Founders program must also be a way of cutting through the processes that need to be in place to run a big company like Coca Cola, but don’t need to be in place when embarking on product design sprints for a start-up.

This shows that partnerships don’t all have to look and feel the same.  Partnerships can range from being a pure resell model through to being spin off companies where there is still a strong partnership in place but a degree of separation to allow for innovation.

Partnerships can be great for start-up companies who want to grow quickly and reach new customers but lack the infrastructure and staffing resources required to deliver this growth.  Partnering with a larger company who can resell your services means you have instant access to an established sales force without the cost of investing in sales teams.

One thing we always talk about is the time and trust required for a successful partnership.  These relationships don’t just work from day one – they take a long time to establish and work out a good fit, and an ever longer time to build trust so that our partners know how we like to work at C24, and likewise we know how our partners like to work.  Despite the time and effort involved, we couldn’t have grown our business without our partners – the customers we’ve reached, the opportunities we’ve bid for and the projects we have carried out would not have been possible without our partner ecosystem.  Our business intelligence tool, BI24, might never have reached the many different sectors it has without our strong partnerships in place with industry leaders in their respective sectors.

And partnerships don’t just mean ‘reselling’.  We also partner with clients and deliver a range of services to them, above and beyond just IT.  This could take the form of marketing and PR – helping to promote their stories alongside our own – and helping to grow their businesses in the process.

Many companies struggle with partnerships because they don’t have a built in framework for how to engage with partners.  A partner contract is not going to fix it – it’s about having a go-to-market strategy for your partner base; how you’ll work with them, what resources you commit to them and the methods that are going to be used to attract and retain partners.

At the end of the day, the worry about partnerships usually comes from risk.  And usually risk to customer relationships.  Working to eliminate the risk to customer relationships is the most important, yet most difficult, issue to overcome.  We usually work with our new partners on an initial project to test the water and let each side see that we aren’t after each other’s business, but in fact we are trying to develop incremental new revenues for both parties.

As a relatively small company (that is now part of a much bigger company with Six Degrees Group), we have been able to work with customers of all scales and sizes through partnerships – and larger companies who we have partnered with have helped us to reach better press coverage with our clients, and generate connections with other similar companies in our sector.  In some partnerships we are the sales engine, whilst in others we deliver the technicians and hardware.

I feel that many companies, especially in the IT sector, are not making the most of partnerships to become disruptors in their space.  Multinational corporates could call on the thousands of entrepreneurial start-ups across the country to reinvigorate their processes, products and innovation practices – rather than doing things in the same way for the next twenty years.

We have to be confident in our partnerships that our partners aren’t going to compete against us.  We in fact say, approach us to partner and compete with us, not against us.  Let’s see what is possible through new partnerships and invigorating old partnerships – what can we come up with?  What innovations can we develop?  Who can we reach?  What can we solve?

 

Here are a few interesting follow on links that might be of interest to anyone looking at corporate and start-up collaboration and innovation:

Partnerships between technology-based start-ups and established firms: making them work – University of Cambridge

Coca Cola Company: How big companies can work with startups

Forbes: How start-ups can land big partnerships

Wright Hassall works with C24 for better decision making


C24 is delighted to announce our case study with Wright Hassall, covering our work in delivering better reporting and data analytics to an ambitious law firm.

Download the full case study here: C24 – Wright Hassall Case Study.

‘Bring Your Own App’ – The Next Big Trend in Enterprise IT


Death_to_stock_photography_weekend_work (7 of 10)

 

The move to increased mobility and higher expectations is somewhat down to a change in the age of new employees coming into workplaces.  Millennials have grown up with the internet – it is a ubiquitous resource in their daily lives; supporting their school work, research, job applications, personal entertainment and work support and guidance.  Combined with an enterprise software industry that has remained relatively unchained over the past decade, and the conflict between expectations and delivery is ever more present.

 

Legacy Vendors vs Startups

Larger software vendors are failing to invest in redesigning their applications, merely adding functionality to their vast portfolios in a piecemeal fashion.  Compared with startups who are designing user-friendly interfaces from the ground up, the gap between consumer software design over the past 24 months and legacy enterprise applications that are over 20 years old is widening.  Many software vendors are now implementing cloud versions of their tools, yet these alterations have usually been done retrospectively and user interfaces are often not the primary defining feature of these newly launched tools.

And the generational issue goes beyond the user interface.

 

 

Social Collaboration

Millennials now expect to be able to interact socially with colleagues and collaborate in real-time, and many software products are being developed to address this need for social collaboration in the workplace, such as Yammer, which not only enables conversations via technology but can act as a knowledge hub where specialists can share insights and information with each other.

This change in expectations has meant that the enterprise market has really been opened up to software startups that previously used to battle with credibility issues when selling to large corporate customers, but can now differentiate themselves against the legacy enterprise application providers in the market.

 

 

Bring Your Own App

Tech savvy employees are no longer waiting for their company’s IT team to find a solution; they are solving the problems themselves by developing their own apps or code, or introducing applications they have found or use at home, to the workplace.

This is not a new phenomenon, in fact as far back as the 1980s, ‘bring your own app’ was a trend where workers would bring in their own spreadsheets and formulas developed at home to assist with day to day work activities.

Picture the situation.  You ask your marketing department to design an e-newsletter that is going to be emailed out to prospects.  The IT department previously installed a marketing application that includes a newsletter function, but it doesn’t track opens or personalise the emails – it just allows you to design a newsletter and send it en masse to an email list.  Your Graduate Marketing Assistant tells you that the online e-shot tool, Mailchimp, might be a better (and potentially free) option that can help with tracking and analytics – and is available immediately to use.  It will probably deliver more than your installed legacy product can do, however it is not a ‘company approved application’. What is the best course of action?

 

Application stores and exchanges

As a workforce we are all more technically savvy than ever before, and organisations are trying to channel this energy for ‘bring your own app’ into managed application stores, where users can go into a ‘store’ of pre-approved apps selected by their company and choose which ones they want to use.

It may be that a company offers a range of email clients that workers can choose from – after all, if it means the employee can do their job more productively on a technology platform they are familiar with then it makes sense for the company too.

As previously mentioned, Salesforce’s AppExchange application store is positioning itself as a hub for enterprise applications, all centred around the core CRM system.  This not only drives integration between software products, encouraging developers to create plugins for their tools to help foster collaboration between applications, but also encourages a newer generation of developers to create applications at the enterprise level; with a clear route to consumers through the AppExchange.

Companies not using Salesforce’s AppExchange or another bespoke application store need to ensure that they have sufficient policies in place about how employees interact with personal applications in a work environment.  This extends to what tasks the personal apps can be used to deliver, and also what data can be processed by these applications.  For example, a CFO would not want his staff exporting confidential financial data to an employee’s mobile device to review within a personal application that may store all data in a public cloud storage service.

 

 

If you are interested in knowing more about the consumerisation of enterprise applications then read our whitepaper on “The Consumerisation of Enterprise Applications”.

 

Is traditional ERP broken?


Revenues for traditional ERP licences have been declining since 2013, and with SAAS revenues on the rise, the gap will only get bigger as the cloud ERP app market matures.

ERP Broken

PWC reports that investments in SAAS applications will more than double to $78bn while investments in traditional ERP deployments will decline by more than 30% to less than $15bn in the next year.  The rise of SAAS is undoubtedly taking its toll on traditional licencing revenues, and even traditional ERP vendors are seeing their SAAS offerings overtake their traditional ERP sales in terms of revenues.

So is traditional ERP finally broken?

Maybe.  What is for certain is that “Hybrid ERP” – a term coined by Gartner, is becoming the go-to standard for many organisations struggling to maintain legacy ERP systems.  Sometimes referred to as “two-tier ERP”, Hybrid ERP is a mix of legacy, centralised ERP platforms combined with departmentally focused, cloud solutions; such as SAAS solutions for payroll, invoicing or workforce management.  Gartner predicts that most organisations will move away from monolithic ERP platforms to a hybrid ERP approach within the next 5 years, but warns that it may not improve TCO over the solution lifecycle if not managed carefully and integrated into existing systems and working practices.

Organisations are now looking at cloud-based applications to fulfil functionality that would traditionally sit within a comprehensive ERP package, but focus on a single function or department, such as:

  • Payroll
  • Sourcing
  • Web and ecommerce platform
  • Workforce management
  • Invoicing and self-service capabilities for suppliers

The flexibility of cloud is obvious, but why are more organisations really moving away from traditional ERP deployments in favour of cloud based SAAS solutions for parts of their ERP strategy?

 

  • Cost effectiveness

PWC predicts that cloud based SAAS ERP models are 6x less costly to implement, manage and support than traditional ERP deployments, due to the high costs associated with changing large scale, mission critical ERP solutions.

 

  • One size does not fit all

Without heavy customisation and development, off the shelf ERP platforms often don’t fit a company’s operations so hybrid ERP offers an approach for organisations to ‘customise’ their ERP approach by moving to cloud SAAS applications for specific functions whilst leaving the core ERP platform in place.

 

  • Applications can be chosen by departments themselves.

Departments now have the autonomy to make choices about the applications they choose to work with, by bolting on function specific tools to their central ERP system for a hybrid approach to software management.  This now means that the payroll application utilised by a payroll department can be chosen by them, rather than dictated to them by a central IT team deploying an organisation-wide ERP solution.  This gives department leaders more control over how they run their operations and the tools that their teams work with.

 

  • Hybrid ERP suits companies with diverse locations and operations.

Centralised ERP platforms can work well if there is just a handful of office locations, based in one country.  However, once a company has offices in a number of countries, legacy ERP systems struggle to keep up with localisation requirements such as country-specific regulations or financial guidelines.  Utilising cloud SAAS solutions to supplement a central ERP system could be a way of ensuring that subsidiaries meet the requirements required locally without impacting the entire organisation’s operations.

 

  • Legacy applications don’t work for the world in 2015

Working practices continue to change rapidly as communications between suppliers, vendors and buyers become near-instant through technology and connectivity tools.  This impacts on ERP platforms which can be seen as outdated and slow to react in comparison with modern cloud apps that are being developed with speed and agility in mind.  This chasm between legacy ERP and modern working expectations causes organisations to look outside of their onsite ERP systems for a more flexible approach, in order to be more agile for suppliers and responsive to clients.

 

  • Modular approach is the rule, not the exception

The days of making large capital IT purchases for multi-year ERP deployments are nearing their end, as IT and business leaders want faster results from their IT investments, and cannot wait 2 years for a solution to be implemented (and then many more years while the solution is in use) in order to access new functionality.  Taking a modular approach where new services are commissioned on demand from the cloud makes perfect sense for organisations experiencing growth; who cannot predict what their organisation will look like five years from now.  It’s also more cost-effective and accessible financially for smaller businesses who can’t afford the outlay of a company-wide ERP upgrade.

 

  • User experience is critical

Many ERP programs were originally scoped, designed and delivered by central IT teams with input from department heads on what the business’ requirements were.  Tactical SAAS cloud services that are overlaying traditional ERP applications are often chosen by the individuals who will be working in the proposed application, so many are now designed with user experience as the main deliverable, rather than IT teams defining the solution requirement.

Most cloud SAAS ERP solutions have a strong focus on usability, and are often delivered within a standardised web interface for easy adoption.  The apps are usually simple to purchase, making it easier than ever for businesses to trial and test solutions and integrate them quickly into operations, compared with a rip and replace of an ERP infrastructure.

 

  • Pay as you go capability

ERP is usually a one size fits all affair, or at most has a “small, medium and large” offering.  With a hybrid ERP model, cloud SAAS apps can be purchased on a pay-as-you-go basis, linked to the number of users rather than the size of the organisation.  This can prove to be a much more scalable and cost-effective model for organisations who just need tactical solutions to immediate problems, without disrupting their existing ERP strategy.

 

Hybrid ERP definitely looks set to be a growth area as legacy ERP solutions become less attractive both in terms of cost, ease of deployment and functionality.  The key to a successful hybrid ERP deployment will be ensuring that procurement controls are in place for new cloud SAAS ERP apps to prevent sprawl across the organisation and that there is an internal team focused on integration between solutions, building APIs where possible between applications for seamless delivery.

With many cloud apps being delivered from the same public cloud platforms, this process of integration should become easier as the base infrastructure and architecture converges between providers.

 

 

Image courtesy of ShineALight.

HP CS100 with Citrix XenDesktop running video graphics – task workers, knowledge workers and power users


Great solution from HP, C24 are currently evaluating the solution for a number of clients allowing us to deliver a hybrid based user model for task workers, knowledge workers and power users.