If you follow me on Twitter or if you attended WRC at the beautiful Cavalieri hotel in Rome you’ll know that I had the privilege to moderate a panel of distinguished retailers to discuss the subject of discounting, specifically selling for less than the planned margin.
One of the event’s sponsors JDA had earlier presented data from a survey of retail leaders showing that their top foiur risk concerns included : increasing competitive threats (41%); margin erosion and cost reduction (39%); data security threats (25%), and attracting and retaining customers (24%).
Our panel, hosted by Congress sponsor and price optimisation software vendor Revionics, tackled the margin erosion issue asking: ‘How do we kick the discounting habit?’. The panellists, ranging across wholesale, fashion and apparel and general merchandise sectors, established a consensus view that discounting for its own sake, without a clear strategic goal and tactical execution, could be more damaging than beneficial to the bottom line – as was also arguably seen more recently with some of the more negative sentiment generated around Amazon Prime Day, as well as Black Friday.
Many of your peers with heavy enterprise investment in SAP, are thinking about the business case for HANA. In this research we looked at different HANA use cases and at early efforts to learn how to run an enterprise by predicting, in real time, the direction of a stream of granular observations, rather than by waiting for period end and then explaining variances from plan : https://www.forrester.com/SAP+Hana+Is+The+Answer+Whats+The+Question/fulltext/-/E-RES117654
But now some firms are migrating to Suite on HANA or more correctly SAP Business Suite Powered By HANA in search of digital transformation opportunities such as the ability to manufacture a batch of one or to target a segment of one. More firms are planning to investigate S4HANA to simplify and streamline their data and processes to get in shape for the more intense competition of a more transparent and digitally empowered economy. We looked here at the stages in planning the transitions the skills and help you will need : https://www.forrester.com/Brief+Plan+The+Next+Phase+Of+Your+SAP+Journey/fulltext/-/E-res122841
Look out for the next in the series in which we investigate HANA scalability.
Following some work for a client in oil field services around the most appropriate ERP solution, I’ve had some questions about the impact of IFRS on accounting for exploration and evaluation (E&E). In a nutshell, IFRS offers some opportunities for energy firms or joint ventures to capitalize E&E costs that they might have expensed under previous local or US GAAP policies.
Accounting policy analysts will doubtless tell you that, in terms of record-to-report processes, you’ve got to be sure to work out how to match each expense element to commercially viable reserves on a field-by-field basis. Unmatched costs have to be expensed. This can be quite challenging, especially for infrastructure or services shared across fields. The challenge is particularly acute when exploration is undertaken as a joint venture or where firms trade exploration blocks.
Forrester undertook some work for a European hydrocarbon firm that was involved in numerous joint ventures and which had a high level of activity in trading exploration blocks. We leveraged this research and found that meeting the firm’s business needs required the CIO to be involved early on in preparing for M&A activity.
Do you ever wonder how your business applications portfolio stacks up against your peers?
We conducted a series of interviews to understand how firms measure applications portfolio coverage of their business units and business models, end-user use of applications, and business value. We’re inviting application leaders to take a 10 to 15 minute survey anonymously to give their feedback on the metrics and their own estimate of their scores. We plan to aggregate the data then slice and dice by size or SIC or other “firmographics,” so that you can compare yourself with similar firms.
Dozens of your peers have already completed the survey and we want to write the report next week. But it's not too late. You can still join the fun here :
Application development and delivery (AD&D) professionals in retail must contend with established categories of packaged apps for store operations, eCommerce, supply chain, and loyalty.
But most packages hail from the pre-digital disruption era of mono-channel retail — store or eCommerce.
AD&D pros must chart an application upgrade and integration course that delivers omni-channel consumer experiences despite the incompatibility of the package data models with new use cases such as click-and-collect or buy online, return in store.
I've had a preview of the new FUJITSU Retail Solution Market Place and I'm excited because it helps retailers to orchestrate the applications and data they already have to meet consumers' cross-channel expectations.
On the one hand, I saw highly prescriptive, standardized, catalog-type collections that fit well together but which are rather boring and maybe don’t make the best of my ramshackle old house. On the other hand, I visited a lot of junk shops with interesting but incompatible pieces, ranging from a Victorian birdcage (really!) to an Art Deco lampshade. It made me think about the challenges that application development and delivery professionals face in formulating application portfolio strategies.
When should they single-source and when should they choose a best-of-breed strategy? For which applications should they consider SaaS solutions? What is the best way to use systems integrators to help reach a target portfolio at the lowest opportunity cost?
Join us at Forrester’s Forum for Application Development and Delivery Professionals on October 17 and 18 in Indianapolis, where my colleagues Paul Hamerman, Liz Herbert,and Jost Hoppermann will be discussing their research into application portfolio strategy. and answering questions about applications portfolio transformation such as:
What’s the difference between application upgrade and transformation?
Where do you find the help you need for applications portfolio transformation?
If technologies like mobile, social, and in-memory analytics are so important, why don’t we deploy them ourselves? Why are we waiting for vendors to bundle it with their releases?
Digital disruption brings new competitors, new products, new services, and new types of customer relationships into focus. As firms adapt their product market channel strategies to new threats and opportunities, they look to transform their operating models: centralizing, decentralizing, and federating treasury, procurement, finance, IT, and even product development and customer relationships. App development and delivery pros challenged with supporting new operating models often ask Forrester whether they can share the same enterprise apps between group business units, and if they can share, what the benefits might be.
This research looked at large firms that have a federated or centralized IT model to understand what they chose to standardize and what they allowed to vary in their ERP. Figures 2 and 3 of the report look at the models and the typical drivers in terms of common customers, suppliers, bills of materials, and routings. Typical drivers for such enterprise apps strategies include harvesting the economies of standardized terms with suppliers and customers. In practice, the big prize is not actually “cost” — such as bulk purchase terms with group suppliers — but squeezing out excess working capital by applying common credit and settlement terms with group-level customers and suppliers, common comparable cycle times to drive out inventory and work in progress, and common cash forecasting and treasury to make cash and credit work more effectively at the group level.
I was intrigued to read in StorefrontBacktalk about Target’s plans to reduce its spending on IT. Apparently, investors warmed to the message, but most of our readers tell us that it’s not how much you spend, but how well you spend it that really determines whether investors see a good return on IT investment. In this research, we asked retailers which IT investments yield a quick financial return and which have the most potential to drive superior returns.
We found that pricing and promotion technologies can have a quick impact on financial performance and forecasting and that allocation and assortment optimization applications have the most potential to drive inventory turn and margin to generate favorable returns. Years ago, I heard of the brilliant success of retail entrepreneur Mike Ashley, which was attributed to his attention to assortment planning. However well you execute, you can’t make money in retail without a plan that ensures that the right merchandise is available in the right location at the right time and price.
We are re-running the survey to see how retailers’ views have changed. Please complete the survey to add your voice to our research (please be patient; it takes a little while).
Update/Correction: Target has told Forrester that, far from reducing IT spending, it actually plans to increase its IT initiatives in 2014. All the more reason to consider your own IT investment priorities!
New Mountain Capital, the owner of Red Prairie, the demand sensing and supply chain execution software vendor, announced last week that it would fully acquire supply chain planning vendor JDA. The merger will result in a supply-chain planning and execution solution provider with more than $1 billion in revenue with 87 of the world’s top 100 consumer goods manufacturers and 82 of the world’s top 100 retailers running either Red Prairie or JDA applications.
For some time Red Prairie has been buying assets to extend supply chain into the store, a strategy it calls “commerce in motion.” The idea is to extend beyond mere inventory visibility to better predict where inventory should be held. Red Prairie’s demand sensing and eCommerce solutions as well as its warehouse management and store execution capabilities can complement JDA’s collaborative planning to provide a platform for collaborative new product introduction and promotion investments.
This looks like an extension of the idea that applications and processes will become interenterprise or value-chain centered rather than enterprise focused and will ultimately move to the cloud to capitalize on collaboration opportunities with a whole network of value chain partners. JDA 8.0 is already delivered (together with multichannel assortment planning) as a cloud solution.
It seems to me the opportunity to think beyond "four walls" and plan demand, in the case of retailers all the way back up to sourcing, or in the case of manufacturers to plan and execute down to the shelf or the fulfilment of e-commerce orders, offers a really intriguing opportunity to deliver more effectively on private-label and branded merchandise assortments to demanding consumers browsing and buying across channels.