Digital transformation - Atreus GmbH · strategy for their company. This is not merely an IT issue,...

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From planning through to successful execution.

Digital transformation

Digital transformation is the CEO topic if you want to be successful in both online and offline business. It requires entirely new leadership models, because you have to be able to manage different businesses simultaneously, at greatly varying speeds. It’s like driving your car and in the Formula 1 at the same time.«

Dr. Harald Linné, Managing Partner Atreus

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The need for digital transformation is a hard fact that will have an enormous influ-ence on the future growth of companies. The special challenge that companies un-dergoing a digital transformation face is the speed at which markets are changing. The key question is: how can I transform my existing business, which has been positioned successfully on the market for decades, in such a way that the high-mar-gin products continue to make a big con-tribution to earnings, and yet at the same

ap are just as important as having the right team to implement the measures. Atreus has successfully mastered these demanding challenges several times, in the widest range of corporate situations and phases. We look forward to sharing our solutions and experience in imple-menting them with you. •

YourDr. Harald LinnéManaging Partner

Editorial

Digital transformation – Three focal points

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Digital transformation is the CEO topic! The digital transformation involves

the entire enterprise, not just individ-ual divisions that drive it forward. All CEOs have to design a digital strategy for their company. This is not merely an IT issue, although it does enormously change the IT strategy (sourcing, Cloud, etc.).

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Focus on the customers! The customers are the drivers of a

digital transformation. For customers, processes have to be simple, fast and highly transparent. Modern analytics tools help here. “Customer Journey” and “Conversion Rate Optimization” are the two most important key terms.

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Speed counts! Interactions with customers are

becoming significantly faster, and the periods available for product and service development and logistics, much shorter. “Try often, succeed often” applies: Only those who constantly reappraise themselves against the market and rapidly adapt their products and processes to work well on it gain a valid competitive advantage.

time be able to react with new products to disruptive market changes. A digital transformation changes business models, the value chains of all companies and industries and makes new manage-ment models necessary. Only those en-terprises that adjust quickly enough to the altered commercial and technological framework conditions, and to the new customer demands, and rethink their management models, will survive. In do-ing so, a digital strategy and digital roadm-

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lies on improving what they already have. But investing too little in digital expertise endangers important learn-ing opportunities and costs market share.

Omni- or multi-channel is a question that confronts many companies with tremendous challenges. It is not easy to bring together the offline, online and mobile worlds, but companies have to reach their customers through all avail-able channels, and utilize this data in-telligence. Every channel has its own cycle times and poses different de-mands on product development, prod-uct presentation and logistics, etc.

Many companies that have set off down the digital path are still too prod-uct and price driven. But online servic-es connected to the product range are extremely important. Customers often gather information using digital means before buying. The better these servic-es are presented, the more they can support and promote the sale of the products. Customers are increasingly making use of the individualization of online configuration options. •

We are only at the beginning of the digital transformation that affects all industries. The „pure online players“ will now increasingly be attacking companies from the offline world. „Your margin is my future.“ The best-known and best examples of this are Apple, Uber, AirBnB and Netflix.

Even the successful digital enterprises are going to have to repeatedly rein-vent themselves. Amazon, for in-stance, sells books on the Web. The contents of the books themselves are also offered through the Kindle eReader. Or take Apple, which already offers a first-class Web-based product range with its high-tech products iMac, iPhone and iPad, combined with the world‘s largest trading platform for digital music iTunes. Now it is adding ever more special streaming services to its product portfolio. Apple is cur-rently piloting the selling of mobile te-lephony contracts to extend its service range.

Many successful B2C companies do not make use of, or at least do not fully exhaust the digital opportunities open to them. On the contrary, their focus


Digital transformation – Where are we today?

AN INSIGHT

Key challenges on the digital road, as Atreus sees them

Expert consideration of the business case

Setting up well-structured multichannel sales

Aligning offline and online business Frequency on online channels and

presence in the marketplaces Homogeneous customer journey Dimensioning the IT infrastructure

for peak loads Driving forward standardization

and automation Clear product focus in the shop Online services as the basis for

further product sales Fully exploiting cross-upselling,

retargeting and SEO/SEM

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Digital roadmap

Professionals | Pure Players How can I stay a trendsetter? What new services should I offer? How can I internationalize my digital business? How do I support individualization and personalization? How do I enlarge the online community? How do I improve my software-development competence?

Early | Late Adaptors What is the management model of the future? Where will I invest in future? What digital marketplaces should I position my product range on?

How can I manage my offline and online sales channels? How can I improve the customer journey? How can I improve the conversion rate? How can I improve my IT (availability, security, Cloud strategy, etc.) and logistics (reliable daily delivery)?

Laggards What role does the digital channel play for my business? How will my value chain change? What is the business case for the online business? How can I manage the conflict with the existing business? How can I generate frequency?

Every company that takes the digital path is at a different stage of its digital roadmap, so the questions these companies have to answer and steps they have to take vary greatly.

Strategy

Digital roadmap

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Thanks to our many years of experience in realizing digital business models, Atreus understands the situations and challenges of our clients, can quickly present individually tailored solutions and provide exactly the right manager or team to execute your specific digital transformation.

The digital capabilities of Atreus

Digital business models

Creation of the digital strategy Creation of a digital business model Further development of the digital services

Business case calculations, Controlling/KPI management

Omni-/Multichannel sales models Partner management Commercial due diligence

User front-end

User interface Category management Customer loyalty measures Campaign management Implementing the customer journey Online marketing, online sales and service

Digital readiness

Development of a new/digital management model

Standardization, automation of processes and systems

IT management, front-end + back-end technologies

Order fulfillment/Logistics Human resource management Change management of the organization

Customer relationship management

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What do companies have to do?

Professional transformation management is needed to make these often disruptive modifications to the business model and operations. It encompasses primarily the following questions: What do the future digital strategy and roadmap look like?

What processes and systems are affected?

What is the best procedure and structural organization?

How complex are the changes? How great is the risk of failing? What does the working model look like in the new world?

Permanent know-how exchange, agile project execution with manageable pilot projects and mutual assessment ensure a transformation that can be controlled and validated at all times.

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For example, which hotel chain has the most hotel rooms? As always, an answer can be found quickly by taking a glance at Wikipedia, where names like InterConti-nental, Marriot and Hilton are cited. But is that really correct? Where is the digital transformation making itself felt here? Booking portals the likes of hrs.de or ho-tel.de come to mind. And of course these portals have caused changes in marketing and sales processes. But they were mere-ly the first wave. You have probably also

heard of the website Airbnb by now as well! The original name was Airbe-dandbreakfast, which was abbreviated to Airbnb in 2009. There are around 40,000 accommodations on this platform in Ger-many alone. According to Airbnb, it offers

No industry is excluded from the digital transformation, and it is changing market and competitive structures

FOCUS: MARKET AND COMPETITION IN DIGITAL TRANSFORMATION PROCESSES

The digital transformation is more than just e-commerce (online selling) or social media, and in many sectors the entire market structures will change and new competitors will arise. Looking at the competitor analyses and strategic planning processes of many companies, they often only consider the market and competition from a traditional standpoint.

lodgings in 192 countries – ranging from rooms in shared apartments in Hamburg’s Schanzenviertel district, to exclusive lofts in Manhattan and farmhouses in Kenya. And new ones are being added every day. Okay, Airbnb isn’t a hotel chain, but it is without doubt a new player in the compe-tition for overnight stays that business customers and tourists seek. This makes it a competitor for every hotel, bed and breakfast and youth hostel! And what about the taxi business with Uber? And what do Amazon and eBay mean for the retail structures in Germa-ny? Textiles vendors are struggling with the drop in customer frequency in their physical outlets. The Internet is more and more taking on the decisive role in the in-formation and purchase-decision process of customers, in this and in other seg-ments of the industry as well. But is this only a phenomenon in B2C? No! Cost transparency is increasing on the Internet in the B2B field as well. How

Ralf Strehlau, Member of the Atreus Solution Group

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Exploit growth, sales and earnings potential through better customer focus.«

Analysis Structure

What tasks arise for the companies?

1. The digital transformation dimen-sion has to be added to market and competition analyses. What new players are coming up in the market? How can we assess them? How is the information-gathering and purchase-decision-making behavior of the customers changing? Channels like communities and blogs have to be added to the traditional sources for market and competitor analyses.

2. Every strategy process should have digital topics on its agenda. And not just once – every year!

3. Innovations and projects have to be structured and controlled differently. In the digital environment, “Better done, than perfect!“ applies. The German engineer wants to do things perfectly, but the innovation cycles in the digital world are often too short for that. Developing at/with the customer is the solution! The courage to embrace a certain error culture is needed, because you can only learn from mistakes and remain innovative.

4. When selecting service providers, regardless of whether they be adver-tising agencies, market researchers or whatever, industry expertise is the key criterion for most companies. But the

digital innovations can come from en-tirely different places and industries! Just think of the Google initiative for the driverless car. People with an unorthodox CV or who think out of the box belong in every strategy and project team! And give alternative ser-vice providers a chance!

5. New key management figures and early indicators have to be de-veloped. How is the traffic on the company‘s own website developing? How visible is the company or product brand on the Internet? And what do these figures look like at the competi-tors?

are engineering and plant construction companies adapting? Researching on the Internet has become a matter of course for all Procurement departments. The high profit margins in the replacement parts field are in danger for many makers of


capital goods! A practiced buyer can quickly identify the difference between prices for replacement parts on the Web. The digital transformation is causing the market and competitive structures to change in all industries. So every compa-

ny – irrespective of whether they are B2B or B2C – has to stand up to the challenges of digital transformation. It is wrong to hope that this transformation might not affect any given sector of the economy!

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What operational tasks arose, for example, at a client? The first step was to attain a profound un-derstanding of the way customers gather information and make their purchase deci-sions, regardless of whether they are booking a holiday trip or buying a book or a car tire. As a company, I have to ask my-self the question: How do my customers get informed about the product and pric-es? Do they research on the Web, or do they place their trust in their own personal experience and recommendations from friends and acquaintances? Do they first look online and then go to the store, or do they get advice in the store and then buy online? The marketing and sales activities have to be aligned to these informa-tion-gathering and purchase-deci-sion-making processes. If the Internet is the key to the informa-tion-gathering process, the website be-comes more important. Is the company‘s Internet presence sufficient? What raises my online visibility? Are the investments in the online market channels adequate? Do the existing service providers, e.g. the agencies, have enough Internet exper-tise?

Necessary investments in the Web pres-ence could quickly be derived from the customers‘ behavioral patterns. The on-line marketing instance in the company was then given more importance in the organization and hierarchy. New, well-qual-ified staff members were sought. The fo-cus here was on people from other indus-tries now working in that field, as good „onliners“ are hard to come by and best practices had to be transferred from other sectors! This digital transformation process was then pursued actively at company man-agement level. Digital transformation is not only a topic in the strategy meetings and in sales and marketing. New require-ments on performance indicators and leading indicators were defined. Here, not only daily turnover is relevant, but how many customers visited the website, what products they looked at and which keywords were used most for the search. Like many others, the company has an industry-specific cycle. If the number of related keywords being used increases, e.g. searches for „carports“ in the spring, demand will soon be on the up among the related manufacturers. But if the weather

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is still cold, there will be a delay before the new season begins. So digital transformation is not just a the-oretical matter, it brings with a large num-ber of operational changes. How can a company profit from them? That‘s easy: it can improve its customer focus and as a consequence its growth, sales and earn-ings potential. The question for all compa-nies in the throes of the digital transfor-mation should be: Do I want to be an innovator or a follower? Am I perhaps al-ready lagging behind? If so, it has to be clear to the company that the situation is already getting critical, and that it could well be that the company will be one of the victims of the digital transformation.•

Market Competition


The competition analyses and strategic planning processes of many companies often only include a traditional consideration of the market.«

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very specifically about the German retail sector, with a very small number of isolat-ed exceptions, lost about a decade of pro-gress in the field, and missed the phase when e-commerce really starting taking off. The effects were still being felt in 2013 and 2014.

How is the retail sector positioned today?«

It is way, way behind. It has failed to adapt the physical channels to the new situa-tion. Most retailers operate markets that are far too big, from booksellers to elec-tronics specialists and through to the non-food segment. And the worst of it is that many retailers did not push the digital networking of the channels and instead view them individually, or try to make each of them individually successful. From the customers‘ standpoint that is the wrong approach. All the channels have to be viewed as being intertwined.

How did retail react to Amazon and eBay when e-commerce was getting started?«

Many trading companies were already ex-perimenting a lot with the concept of the Internet and webshops at the end of the 90s. While most of them weren‘t convinced that the new sales channel would come to anything, they wanted to participate in the hype and gather experi-ence. When the Internet bubble then burst, the effect was a double negative: alongside financial losses, the trading bosses and board members saw their res-ervations as having been confirmed. Sud-denly, all Internet strategies collapsed into a smoldering heap.

So not a priority among retailers?« The fact that many Internet strategies were put on ice only served to propel the successful business models of Amazon and eBay even further forward. The Ger-man retail sector, and I am talking here

Thorough digital networking is the lever that will decide on future success or failure.


The DNA of digitalization

FOCUS: THE GERMAN RETAIL SECTORWolfgang Lux, Member of the Atreus Solution Group

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Inserting the DNA of digitalization into all areas of retailing

And at those companies that have notably been active in building up independent digital structures in the last two years, the dovetailing of digital and analog has to be driven further forward in a cultural sense as well. The customer itself doesn‘t make a distinction between the two anymore.

What does such a digital network ideally look like?«

Digital networking begins in the store, with digital technologies and digital solu-tions and offers. There is, but that would be going too far here, an enormous range of possibilities, depending on the corpo-rate objectives. They reach all the way to the normal Web channels, to smart phones and to the social-media strategy. You want to proactively and interactively generate contact with the customer. In particular the many owner-managed com-panies still think that the store is the focal point, and that a digital strategy is not nec-essary.

What important lesson has been learned from the development of e-commerce to date?«

One aspect is obvious: The big players in the digital business, like Amazon, all come from other fields and had nothing to do with this sector originally. They do not bear any burden of company history here. A paradigm change is occurring, and a transition from a traditional position to a digital market leadership only comes with a long transformation period, serious pain and losses. •

How do interim managers and transformation teams help?

Companies need their own, individual digital strategy. A carbon copy from an-other successful supplier will not work, because every enterprise has a different culture, and their circumstances also dif-fer. What is important is that they need a certain swarm intelligence, people who inspire, who bring with them experience from outside the company, who have already seen many examples in other environments and who have the ability to understand and empathize with the company‘s culture. Assistance from an external team is important for the imple-mentation successes.

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I am absolutely convinced that bringing together external competencies tailored to the individual needs of the company is the most effective tool.«

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1 Adapting the sales structure

By investing in online retailing, a company can expand its sales activities, realize the full profit margin and retain its brand lead-ership. Then there are the advantages that come from more customer loyalty and increased knowledge of actual buying behavior. But there is no single perfect way to modernize traditional sales struc-tures. In practice an evolutionary approach is often taken: from providing a digital in-formation presentation in the first phase, to establishing an own shop in the second phase, and on to concentrating on direct sales and limiting sales through other channels in the third. But the truth is that

enabled consumers to design and person-alize their sports shoes. In 2006, NIKE then brought out a revolutionary innova-tion in the NIKE+: a shoe with a built-in sensor that can connect to a digital de-vice, enabling users to record their train-ing efforts and fitness goals and share them with others. The subsequent inno-vation, the NIKE+FUELBAND SE, took it another step further. Now, the wearer‘s movements can be measured all day long by means of an electronic armband.

Digital transformation in marketing and sales

FOCUS: MARKETING AND SALES

The digital transformation has radically changed consumer behavior. New technologies are generating ever more new possibilities for marketing and sales solutions. What opportunities does it give your company to use the transformation for its product offering and processes? Which hurdles have to be overcome and how can interim managers help? In practice, three focal points are emerging.

it is not necessarily the case that digital sales channels have to squeeze out their stationary counterparts. One good exam-ple of this is the growing number of digital companies that are also investing in phys-ical stores.

2 Product and service innovations

Digital solutions can complement tradi-tional products, replace them or open up entirely new fields of business. NIKE is a good example of this. This maker of shoes, clothing and sports equipment launched its own website in 1996 and then the NIKEiD program in 1999, which


Sales structure adjustments

Product and service innovations

Sergey Bert Klingsporn, Member of the Atreus Solution Group

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3 Comprehensive customer contact

Brand strategy, product strategy, sales strategy – all aspects of a company are affected by the digital transformation. Customers want companies to be close by their side whenever they come into contact with brands, products or the com-

pany itself. In order to provide this, the interdisciplinary collaboration in the com-pany often has to be relearned, because the walls between areas of responsibility become less rigid. Many company groups with a diversified brand portfolio have in addition developed a kind of internal com-

Customers want closer contact, wherever they come across brands, products and companies.«

Interim management for the digital transformation

Corporate decision-makers need in particular management competence, in order to be able to drive the digital transformation forwards. Using interim managers who have already realized similar projects with great success several times in the past, and who bring experience from a range of differ-ent business model innovations, is one good way of ensuring that compe-tence.

With their years of experience, inter-im managers help develop supradivi-sional strategies and concepts, com-pile action and project plans and

successfully manage external service providers and the new business mod-els and processes internally.

An experienced interim manager has a good chance of making a success of the transition from a traditional business model into a multichannel solution. He has no past in the organ-ization, is neutral and implements the solution in the interests of the com-pany as a whole.

The use of supradivisional teams with complementary skills has prov-en itself in practice. Digital experts

should be involved in helping gener-ate ideas from the very beginning of the process, and not only then be added when the product is already designed.

The cultural changes and compa-ny-wide implications of digital pro-jects quickly means they become too complex for the company’s own pro-ject teams to cope with. Interim man-agers are a big help here.

petition between their brands over the years, and the people in charge now have to learn to work together with their for-mer adversaries on a joint digital platform and on an equal footing. •


Comprehensive customer contact

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How CEWE mastered the digital turnaround

CASE STUDY CEWE COLOR

The European photographic services provider to specialist retailers and large drugstore and electrical goods markets has transformed into a brand-name manufacturer that specializes in digital photography and that receives 80% of its orders through the Internet. The CEWE Photobook is indicative of this success, having progressed to become Europe’s most popular photo book since its market launch.

Dr. Rolf Hollander is CEO of Neumüller CEWE COLOR Stiftung and CEWE Stiftung & Co. KGaA. Born in Stade, he studied management at Hamburg University. After his doctor-ate, he initially remained at the university as an aca-demic assistant, before hiring on at A.T. Kearney as a management consultant in 1982. He has been employed at CEWE since 1986, as member of the Management Board since 1992 and as CEO since 2002. In this function he realized the transformation from an analogue to a digital photo service provider and extended the traditional Oldenburg company‘s lead on the European photo finishing market.

How CEWE became digital brand, with Atreus’ help At the end of 2011, CEWE took an Atreus Manager on board as its interim head of marketing, with the assignment of form-ing CEWE into a brand. Initially his com-mission was to further develop the brand strategy for the CEWE Photobook. He was also to create a new brand for corporate clients, with which CEWE could expand in the field of online print, with commercial products such as brochures and flyers. CEWE had defined this segment as a stra-tegic growth market. Thirdly, the manager was to find out whether it was possible to combine the services for private and commercial customers under one overrid-ing brand. He started off by bringing other company departments such as Customer Relationship Management (CRM) into the marketing operations and growing them. Then, in close collaboration with CEWE, he staffed the management positions in product and online marketing, and creat-ed a position for international marketing.


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The Atreus Manager’s performance as an advising strategist, manager and comrade-in-arms was outstanding.«

Dr. Rolf Hollander,

CEO of CEWE Stiftung & Co. KGaA

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The preliminary results are impressive: the marketing activities of all these divisions, and those from retail marketing, PR and sponsoring, all now come together in an integrated and company-wide brand and communication strategy. He refocused the brand strategy for the CEWE Photo-book. At the time, the product was posi-

tioned unemotionally, as the explanatory claim showed: „My CEWE PHOTOBOOK – Your photos as a real book“. He wanted it to be made clear in future that the CEWE Photobook would be a way to nurture and enjoy memorable experiences. The entire marketing communication was coupled to what was dubbed the customer’s „Jour-

ney of Joy“ – the joy described above in remembering, reliving, designing and sharing. The emotional claim: „My CEWE PHOTOBOOK: My Life“ expressed that feeling. For the realization, the manager put out an external call for proposals for all the creative and media services, and com-missioned a lead agency. TV, newsletter


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Digital brand name

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Aided brand recognition

28 %

36 %

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Apr 2010 Jan 2011 Jan 2012 Jan 2013 Jan 2014

15 %

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32 %36 %

Apr 2010 Jan 2011 Jan 2012 Jan 2013 Jan 2014

Source: GfK brand study 2014

Brand recognition CEWE PHOTOBOOK (Germany)

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Optimizing the product chain

and online campaigns followed, as well as advertising on boarding cards and at 16 airports, on a TUI Boeing 737-800 holiday plan painted in the CEWE colors and on intercity Deutsche Bahn trains, and sup-porting PR measures. All e-commerce

activities and the brand communication at more than 34,000 trading partners in 24 European countries were redesigned. At cewe-fotobuch.de, a large range of brand content was created in addition to what was already there. Thousands of CEWE

PHOTOBOOK examples that customers make available at the site, and enthusi-astic customer comments, express the joy and inspiration that our customers experience with the CEWE PHOTOBOOK brand. •


Atreus optimizes production chain at CEWE

The goal was to introduce more effi-cient production systems for the Pho-tobook and for wall photos. To accom-plish it, the entire production and logistics network had to be restruc-tured. An Atreus Manager was hired for the project who had already suc-cessfully installed innovative technolo-gies in companies in past projects. What makes the production of the Photobooks so unusual is that the cus-tomers generally only order one or two copies. That is not so much a challenge in the printing phase, as it is in the fur-ther processing. Because the high-per-formance machines on the market for cutting and binding the books were not ideal for small print runs. With the Atreus Manager’s help, a new kind of production system for the automatic manufacture of photobooks was con-ceived, and inquiries sent out to ma-chine-making companies.

But there was no suitable system on the market, so the decision was made to collaborate with four different com-panies, which adapted their individual part of the system, or developed new process units to meet CEWE’s needs. CEWE then protected the entirely new production line that was created in this way with several patents. The result of this extensive optimiza-tion process: CEWE has been using its own book-on-demand production sys-tem since 2015. It cuts the unit-pro-duction time and product throughput time in half – a key improvement, be-cause it is to be assumed that the com-petition will also speed up its delivery times in future. In the production of wall prints, which was another focus of the project, the product and service quality could also be considerably im-proved, at significantly reduced costs and turnaround times. Also, a concept

for a new, automatic dispatching plant was created. Another advantage of the new system: While batch production previously dominated – i.e. the gathering together of similar orders in order to then pro-cess them together en bloc – varying articles can now be made simultane-ously. New products – most recently the Photobook in Premium Matt, for instance – can now easily be integrat-ed into the existing processes. Con-ventional machines can nonetheless be connected to the new technologies, which is important, because they demonstrate their strengths in particu-lar in peak season. The photographic service provider needs a „production that breathes“, which essentially means it has to have sufficient capaci-ty available to cope with the pre-Christ-mas rush.

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Digital transformation Optimizing the product chain

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CEWE has gone through a huge transformation


Strategies are not born on the drawing board.«

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Sales Growth IAnalog

Growth IIDigital

Transformation

Regional expansion in the analog market

Transformation phase Analog / Digital

(schematic from 2010)

Transformation: Restructuring ended Investment wave ended

Growth: CEWE Photobook print products Commercial application

Growth through th

e digital b

usiness

field

Source: CEWE

Analog

Digital

Retail

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Atreus GmbH

80637 MunichGermanyLandshuter Allee 8 Phone: +49 89 452249 - 0Fax: +49 89 452249 - [email protected]

Digital transformation 0001000011001010001000100010010100001000010000001000111100101001000101010000010010010000110010100010001000100101000010000100000010001111001010010001010100000100100100001100101000101010000010001 DIGITALE TRANSFORMATION 011000100010001001010000100001001000100010001001010000100001001110010100100010101000001001001000011001010001000100010010100001000010000001000111110010100100000010001001010000100001001110010100100010101000001001001000011001010001000100010010100001000010000001000

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Digital transformation - Atreus GmbH · strategy for their company. This is not merely an IT issue,...

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