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April 12, 2018
When it comes to cloud, who’s got the goods?
By: John Zealley

Consumers aren’t buying the status quo.

Incumbents are seeing smaller, nimbler consumer packaged goods players capturing consumers’ hearts and minds—reinventing core experiences such as home dining, delivery, grocery shopping, and health.

As CG&S companies from beverages to cosmetics redesign their business model, many are turning to cloud transformation as a way to deliver new capabilities at speed. Their CIOs see cloud implementation as not only a way to reinvent and streamline massive IT estates but, more broadly, to significantly improve overall business performance.

In an era where the options to expand profitability through cost control have mostly been exhausted, CG&S businesses are beginning to focus more urgently on growth, digital technologies, and a more consumer-centric approach powered by cloud adoption.

Why cloud?
Early adopters in CG&S are becoming increasingly comfortable with the cloud. They realize the value cloud migration delivers, providing rapid access to new technologies in support of direct-to-consumer business models, and transforming sales, marketing, and a range of other business processes and functions from HR and knowledge management to the back office.

Among other benefits, cloud implementation offers CG&S companies the means to:

  • Decrease existing ERP solutions to a compact core while cloud solutions manage growing market diversity and adapt to volatility
  • Unify processes—either within a business unit or functional area, or across an entire enterprise
  • Improve procure-to-pay processes
  • Improve knowledge management capabilities
  • Streamline recruitment and HR processes to help attract and retain talent

Rather than simply managing business functions and processes, #cloud implementation can set the pathway to real growth

 
 
Digital is in the driver’s seat


Beyond ERP CG&S companies have a great opportunity to embrace cloud adoption as a wider business-enabling tool.

Four disruptions
We see four areas in particular that have potential for positive disruption in the CG&S space—all facilitated by cloud.

1. Sales and marketing

  • Real-time, in-store responses from field sales reps
  • Cloud-enabled product placement and visibility through monitored promotional compliance
  • Data set comparisons
  • Geo-spatial recognition for offers
  • Many-to-many connectivity (omni-channel, seamless experiences)
  • Improved visibility into performance at the store level
  • Brand asset management (digital decoupling)
  • Broadening of direct-to-consumer engagement through advanced Software-as-a-Service (SaaS) solutions

2. New product and process innovation

  • Cloud-based enterprise innovation management platforms to capture and connect employees and customers, and to glean consumer insights
  • Online platforms for crowdsourcing innovation and capturing feedback from consumers to inform future product design
  • Product testing and iterative experimentation

3. Forecasting and planning

  • Cloud-hosted store intelligence to help identify the need for product variants that match consumer preferences
  • Cloud-enabled platforms for order automation
  • Cloud-based information management systems to help companies access consumer information across all touch points

4. Manufacturing and supply chain

  • Production, capacity, and logistics management
  • Automated field-manufacturing processes
  • Post-merger manufacturing synergies
  • In-store intelligence to recognize gaps in supply chain and prompt action
  • Mobile solutions for distribution
  • Product lifecycle management solutions

Today we see CG&S companies largely adopting low-risk, as-a-Service models in the form of SaaS, IaaS or PaaS or archiving data in public cloud—all used at the fringe. However, we’re also seeing market leaders trying to understand the business case for cloud (private vs. public, among other debates) and how cloud can generate value other than merely driving cost reduction.

Your journey
How does a CG&S company move most effectively to cloud? There are three potential paths:

  1. Infrastructure-led: Traditional “lift and shift” transformation from an on-premise/private cloud to a public cloud infrastructure, aimed at transforming the core
  2. Applications-led: Driven by capability areas to build new applications and/or rationalize existing application portfolios, aimed at growing the core
  3. Innovation-led: A cloud-provided framework to experiment and try new tactics and strategies in a “fail fast” manner, unlike traditional IT delivery which is often cautious and slow, fostering innovation and collaboration across IT and business teams as well as the broader ecosystem

Based on Accenture’s experience, we recommend starting with an infrastructure-led transformation to release uncommitted capital to be invested in future phases and facilitate broader cloud adoption. This can give companies breathing room and flexibility to explore niche areas for innovation. In a second phase, companies can institutionalize organization-wide cloud adoption to drive innovation-led growth while reducing operating costs.

Five common characteristics in the journey to cloud
Although each CG&S company’s journey to cloud is unique and tailored to individual requirements and cultures, all journeys share five common characteristics.

  1. Use Business Process-as-a-Service (BPaaS) for noncore competencies: Transition work that does not provide competitive advantage—such as HR, procurement, trade settlement, and accounting—which a third party can provide at higher quality and lower cost
  2. Increase software-as-a-service (SaaS) coverage: Help in reducing development and maintenance for software that a partner or vendor can provide
  3. Assess and migrate other apps to Infrastructure-as-a-Service (IaaS) and Platform as-a-Service (PaaS): The use of standardized platforms to minimize support costs for custom code that truly provides significant competitive advantage
  4. Reduce use of custom code: The ability to quantify and measure progress toward reducing custom code in an organization, moving to alternative platforms with improved quality and lower maintenance costs
  5. Rotate vendor usage maintaining competition: A provider ecosystem that provides access to new technologies and helps reduce operational complexity while maintaining competitive pricing pressure

Creating a roadmap
The roadmap to cloud migration we recommend to CG&S companies begins with a comprehensive approach to sustain the journey. As a starting point, there are three steps crucial to arrive at a sound strategic destination.

Step 1: Identify the strategic business imperatives that are most pressing for your organization by first recognizing that cloud underpins any digital future, providing the platform, capabilities, and accessibility to meet business needs and seize new opportunities.

Step 2: Identify how cloud can potentially help reach business goals by offering several advantages when it comes to driving growth, creating agility, improving efficiencies, and strengthening resilience.

Step 3: Assess the company’s appetite for change, realizing that cloud can facilitate extraordinary change, but that delivering value from change requires a range of capabilities that are not available in every company.

Cloud adoption has introduced extraordinary opportunities for CG&S companies to transform how they conceptualize, develop, manage, and sell their products and services. When used to its fullest advantage, cloud and all its attendant benefits have the potential to redefine what it means to be a CG&S company.

#Cloud adoption has introduced extraordinary opportunities for CG&S companies to transform how they conceptualize, develop, manage, and sell their products and services

 
 

Accenture has broad and deep cloud experience and capabilities, and is developing industry cloud solutions and services to guide our CG&S clients at the pace of innovation on their journey to cloud. Find out more here.

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