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Research shows digital IT transformation boosts CPG profits

CPG companies can boost profits by embracing digital and transforming their IT operating model, according to an Accenture study.

Overview

The digital revolution is bringing unprecedented change to the CPG industry. However, Accenture High Performance IT research shows that CPG companies are currently lagging in the IT innovation, agility and execution that will enable this digital transformation.

For example, high performers report their top three business objectives as relating to improving the consumer’s experience. However, most CPG organizations are still focused on cutting costs and increasing productivity. To become high performers, CPG companies need to drive efficiency through IT and reinvest that money to support digital transformation—with their eyes focused on consumers.

To achieve digital transformation by 2020, Accenture recommends a phased approach that includes following a roadmap across multiple IT capabilities, including:

  • IT operating mode

  • Applications

  • Infrastructure

  • Security

  • Enterprise architecture roadmaps

  • Digital vision and strategy

Background

CPG companies will need to interact with consumers, suppliers and retailers in new ways in the digital era. Evolving to a digital operating model will impact all aspects of business.

Companies need to:

  • Rethink the corporate structure, consumer engagement model, product development processes and extended supply chain

  • Make functional changes from R&D to supply chain and more

  • Modify IT systems, processes and services to enable all of these changes, as well as to progress from supporting transaction/automation driven technologies to relationship and experience driven technologies

Key Findings

According to CPG companies can begin their digital IT transformation by assessing the current state of their IT capabilities against high performers in the CPG industry, as well as across all industries.

According to Accenture High Performance IT research, the majority of CPG companies are currently lagging in IT innovation, agility and execution.

Our research found that:

  • High performers allocate 55 percent of their IT budget to deliver strategic business capabilities, while only 40 percent of CPG organizations do the same.

  • Almost one-half of high performers are gaining the ability to embed analytics capabilities and feed consumer insights into their processes, versus 6 percent of CPG organizations.

  • Nearly one-fifth of high performers source their IT partners strategically, versus 10 percent of CPG organizations.

Recommendations

Accenture recommends that CGP enterprises begin the IT journey to digital transformation now and follow an IT roadmap to 2020.

  • Understand the key differences in the overall technology landscape and how IT will need to operate.

  • Develop a customized roadmap to transition from existing to future-state CPG IT capabilities that will enable a digital enterprise.

  • Roadmap phases include new architectures/journey planning, value realization, and optimization and future value.

Taking these steps across the enterprise, ultimately helps improve consumer interactions, increase customer growth and boost profits.