Manufacturing CIOs: Don't Ignore SMAC for Innovation

Dec. 22, 2015
Manufacturing is often considered less responsive to customer preferences than sectors such as retail or consumer packaged goods, but social media, analytics and other technologies can provide manufacturers immediate insights into customers' needs and speed up innovation.

CIOs at manufacturing companies have a reputation as no-frills, no-nonsense types with a knee-jerk aversion to technology fads and the “The Next Big Thing.” That’s for the dot com guys, right? Whether this attitude reflects the nature of the industry, an inherent personality type or the fact that IT budgets in the space are notoriously lean is open to debate. Regardless, manufacturing CIOs who dismiss emerging technologies as hype are missing an opportunity to drive significant benefit.

Social, Mobile, Cloud and Analytics (SMAC) technologies are redefining the pace and focus of product innovation, enabling almost real-time insight into market trends and customer preferences. This insight can help manufacturers enhance and innovate existing product lines, as well as develop new products that are more directly targeted to customer needs.

By its nature, manufacturing is often considered as being less responsive to customer preferences than sectors such as retail or consumer packaged goods. Given the time required to develop and manufacture a product, quickly responding and changing products to suit evolving customer demands presents a challenge. Nonetheless, customer satisfaction, loyalty and product innovation have always been just as important to manufacturers as to any other industry. And innovation has always been essential to maintaining margins and fueling growth.

Social, Mobile, Cloud and Analytics (SMAC) technologies are redefining the pace and focus of product innovation, enabling almost real-time insight into market trends and customer preferences.
—Ralph Billington

Traditionally, many manufacturers have relied on market research and insights from top sales people, distributors and dealers to define product innovation priorities. The problem is that the process of researching, soliciting input, gathering and analyzing information and then applying the analysis to develop new and better products is time-consuming and unwieldy. Indeed, under this approach, the latest model is influenced by a cycle that typically started three years earlier.

SMAC speeds up the innovation process by enabling connectivity to the user, the product and market demands. Rather than ask market researchers, sales people, distributors or dealers what customers want, manufacturers can use SMAC to directly ask their entire customer base what they want. The “ask” is done not in the form of an explicit question, but rather by automatically scanning, acquiring and analyzing a wide range of data from multiple sources, such as website visits, mobile apps, purchases and demographic records.

Third-party service bureaus and in-house teams then aggregate, segregate and analyze all of that data on an ongoing basis. The result is a continual real-time feedback loop that identifies ergonomic, economic and functional nuances that can be linked to customer needs and innovation strategies. For example, a phone app in the cab of an excavator can collect data that identifies a need for a more comfortable seat and a more efficient heating and cooling system. It could also potentially monitor the operator’s heart rate when the excavator reaches maximum incline and contribute to a more stable and safer design.

At a high level, SMAC tools can gather intelligence regarding a product launch in a new geography. For a manufacturer considering the Russian market for the first time, for example, SMAC can be immensely valuable in understanding customer requirements and expectations, cultural factors and the competitive climate.

At a more granular level, SMAC is being applied to address key questions regarding specific customer preferences and requirements, as well as the cost-effectiveness and competitive viability of innovative strategies. Consider dishwashers and how functionality and features can align to variances in customer requirements and preferences: for Saudi consumers, efficient use of water is paramount. Meanwhile there’s no shortage of water in Ireland or Antwerp, but houses and apartments are much smaller than in Saudi Arabia, so space is at a premium. 

For the CIO, enabling SMAC capabilities requires close collaboration with the marketing function, aimed at understanding and articulating how the combination of social media and data analytics can deliver insight into customer requirements and drive product innovation. By defining desired outcomes and the questions that need answering, enterprise buyers can be more effective in finding the right solution.

Service providers offering SMAC solutions must go beyond discussions of generic technology capabilities and focus on business results. Buyers – particularly skeptical CIOs in the manufacturing sector – don’t want to hear about the wonders of mobile and social platforms, or about the latest cloud or ERP capabilities. What will genuinely resonate is demonstrated success at delivering solutions that generate insight into consumer interests that translates into increased demand. Providers who can show how they’ve used technology to improve product lifecycle management and new market development will stand out in an increasingly crowded competitive landscape.

Another imperative is to stay focused with a manageable project and discrete data set that moves the needle by solving a specific problem or delivering a specific benefit.  Providers should resist the temptation to aim too high, as an overly ambitious approach risks becoming mired in oceans of data, resulting in analysis that leads to too many questions and tangents and, ultimately, a lack of actionable results.

In their eagerness to tout their expertise and stand out, many providers oversell their innovation capabilities, or imply that technology change equals innovation. We often see providers stretch their definition of what constitutes innovation, resulting in overdeveloped expectations and underwhelming reality.

Social media and analytics offer enterprises a critical opportunity to enhance product innovation and, specifically, IT’s contribution to innovation. CIOs of manufacturing organizations would be well-served to set aside any remaining skepticism regarding SMAC as a technology fad. The reality is that these tools and technologies are delivering results and will remain a critical driver of success for manufacturers.

Ralph Billington is a managing director with Alsbridge, a global sourcing advisory and consulting firm.

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