Hype Cycle For Consumer Good 252194

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com G00252194
Hype Cycle for Consumer Goods, 2013

Published: 31 July 2013 Analyst(s): Don Scheibenreif, Dale Hagemeyer
Consumer goods manufacturers continue to focus on technologies that will drive competitive differentiation by engaging customers or consumers. Use this Hype Cycle to guide your planning and investment decisions, and to set realistic user expectations in light of market hype.
Table of Contents
Analysis.................................................................................................................................................. 3 What You Need to Know.................................................................................................................. 3 The Hype Cycle................................................................................................................................ 3 The Priority Matrix.............................................................................................................................6 Off the Hype Cycle........................................................................................................................... 7 On the Rise...................................................................................................................................... 8 Virtual Store Research................................................................................................................ 8 Intelligent Image Interpretation.................................................................................................. 10 Manufacturer In-Store Monitoring Analytics...............................................................................11 Retail Activity Optimization........................................................................................................12 Retail Mobile Shopping (Nonpayments).....................................................................................14 Consumer Goods E-Commerce............................................................................................... 17 Climate-Driven Forecasting.......................................................................................................19 Content Marketing.................................................................................................................... 20 At the Peak.....................................................................................................................................21 Marketing Mix Modeling............................................................................................................21 Demand Signal Repository....................................................................................................... 23 Gamification............................................................................................................................. 24 Real-Time Customer Offer Engines........................................................................................... 26 Crowdsourcing......................................................................................................................... 28 Operations Intelligence............................................................................................................. 30 Social Media Marketing Platforms.............................................................................................31
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Sliding Into the Trough....................................................................................................................33 Digital Offers............................................................................................................................. 33 Retail Digital Coupons...............................................................................................................35 Social Analytics.........................................................................................................................37 Social Gaming Ad Networks..................................................................................................... 38 Augmented Reality................................................................................................................... 40 Multiechelon Inventory Optimization..........................................................................................42 Trade Promotion Optimization.................................................................................................. 43 Master Data Management for Consumer Goods.......................................................................44 Enterprise Manufacturing Intelligence........................................................................................47 Climbing the Slope......................................................................................................................... 49 2D Bar Code Marketing............................................................................................................ 49 Quality Process Management Applications............................................................................... 51 Trade Promotion Management (C&SI).......................................................................................53 Merchandising and Category Optimization................................................................................55 PLM for Apparel, Footwear and Accessories............................................................................ 56 PLM for Packaged Food, Beverages and Personal Care Products............................................58 Stages 2 and 3 Sales and Operations Planning........................................................................ 60 MES Applications..................................................................................................................... 61 PLM for Durable Consumer Goods...........................................................................................63 Appendixes.................................................................................................................................... 64 Hype Cycle Phases, Benefit Ratings and Maturity Levels.......................................................... 66 Recommended Reading.......................................................................................................................67
List of Tables
Table 1. Hype Cycle Phases.................................................................................................................66 Table 2. Benefit Ratings........................................................................................................................66 Table 3. Maturity Levels........................................................................................................................67
List of Figures
Figure 1. Hype Cycle for Consumer Goods, 2013.................................................................................. 5 Figure 2. Priority Matrix for Consumer Goods, 2013............................................................................... 7 Figure 3. Hype Cycle for Consumer Goods, 2012................................................................................ 65
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Gartner, Inc. | G00252194
Analysis
This document was revised on 2 August 2013. The document you are viewing is the corrected version. For more information, see the Corrections page on gartner.com.
What You Need to Know

In 2013, consumer goods manufacturers show further signs of having accepted the new market reality: low market growth. As a result, they are focusing more on technologies that will steal share away from competitors based on what the consumer experiences at the store shelf or along the pathway to purchase. At the same time, several market forces remain unchanged, such as rising commodity and energy costs and global political uncertainty. Conservative spending behaviors that consumers adopted in response to the recession, especially the growth of private-label purchases, still do not appear to be moderating. Economic realities that have been prevalent in the marketplace for nearly five years have left a lasting change on consumer buying patterns. There are a few bright spots, such as personal rewards and luxury items, that are responding to pent-up demand. Basically, people still consume less. But for some items, such as gourmet chocolates, they trade up to more luxury products.
The Hype Cycle

This year's Hype Cycle for Consumer Goods (see Figure 1) is intended for IT and supply chain professionals that advise and work closely with sales, marketing, and supply chain organizations in consumer goods companies around the world. We haven't seen meteoric rises in any particular technology since 2012. This year's Hype Cycle does have a number of new entrants that reflect common questions from Gartner's consumer goods clients about driving growth amid uncertain conditions and increasingly connected consumers and customers. They are:
Virtual Store Research: Exposes a shopper to a 3D simulated store environment to gauge their reaction. This is much easier and cheaper than building a mock-up and bringing the shopper to it. Retail Mobile Shopping (Nonpayments): Using a mobile device in the store to gauge where a shopper is at any moment in time and make appropriate offers in real time based on where a shopper is standing or what he or she is scanning with the device. Content Marketing: Assists with the creation and management of digital content in a marketplace that is becoming increasingly digital. Gamification: Making business processes and interactions "fun" and engaging by making them more like a game and less like an application. Augmented Reality: Driving consumer engagement through new technologies like Google Glass.
These additions complement a number of analytical solutions on the Hype Cycle that continue to underscore a trend we have seen for several years of moving away from transactional systems in
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favor of those that are more analytical and, in some cases, predictive in nature to better sense demand in the marketplace and manage uncertainty. We continue to recommend that consumer goods manufacturers evaluate the technologies that will garner them increased share in the short term, or position them as more agile and stronger players as the market improves. We tend to see consumer goods companies looking at solutions based on company types:
Type A companies (early adopters) are considering enterprisewide solutions, such as demand signal repositories, marketing mix modeling and trade promotion optimization. Type B companies (fast followers) are typically examining assortment optimization or PLM initiatives. Type C companies (steady adopters) are focused on more-transactional capabilities, such as retail execution and monitoring, and sales and operations planning.
Our Hype Cycle continues to take a long view of the industry. Consumer goods companies tend to be steady technology adopters. There is rarely a technology that meets with a "bandwagon rush" of consumer goods companies vying to adopt it, because the industry tends to adopt and integrate new technologies at a slow and steady pace relative to other sectors. We are also seeing microcosms of demand based on factors such as social media that have to be monitored in near real time in order to profit before the trend is over. This requires the ability to rapidly sense demand and drive increasing efficiencies from consumer, trade and supply chain activities while still being cost-effective. For the foreseeable future, technologies that focus on what the consumer experiences relative to the purchasing of products will be key to the space, in addition to the ongoing work that manufacturers do with their retail partners. These include virtual store simulation, promotion optimization, social media, context-aware offers, gamification, augmented reality and predictive analytics. This will result in:
A better understanding of consumers to ensure that the right quantities of the right products are available at the shelf for the appropriate demographic that surrounds the store. While this may seem like a perennial and simple problem, it is still pervasive. More direct engagement with consumers before, during and after the purchase decision that will help to understand and shape consumer behaviors and attitudes. Streamlining of product development to be more nimble and in touch with what consumers want right now, as opposed to what they wanted last season or last year.
We expect investment to be up compared to 2012 as companies realize that economic conditions will not return to prerecession levels in the foreseeable future. Failure to make key investments in emerging technologies poses the risk of lower growth rates as more-aggressive competitors making investments are able to improve their competitive position and effectively steal market share.
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Figure 1. Hype Cycle for Consumer Goods, 2013
expectations
Marketing Mix Modeling
Demand Signal Repository Gamification Real-Time Customer Offer Engines Crowdsourcing Operations Intelligence Social Media Marketing Platforms Digital Offers Retail Digital Coupons
Content Marketing Climate-Driven Forecasting Consumer Goods E-Commerce Retail Mobile Shopping (Nonpayments) Retail Activity Optimization Manufacturer In-Store Monitoring Analytics Intelligent Image Interpretation Virtual Store Research Master Data Management for Consumer Goods Enterprise Manufacturing Intelligence Social Analytics Social Gaming Ad Networks Augmented Reality Multiechelon Inventory Optimization Trade Promotion Optimization PLM for Durable Consumer Goods MES Applications Stages 2 and 3 Sales and Operations Planning
PLM for Packaged Food, Beverages and Personal Care Products PLM for Apparel, Footwear and Accessories Merchandising and Category Optimization Trade Promotion Management (C&SI) Quality Process Management Applications 2D Bar Code Marketing As of July 2013
Innovation Trigger
Peak of Inflated Expectations
Trough of Disillusionment
Slope of Enlightenment
Plateau of Productivity
time
Plateau will be reached in: less than 2 years
Source: Gartner (July 2013)
2 to 5 years
5 to 10 years
more than 10 years
obsolete before plateau
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The Priority Matrix

The 2013 Consumer Goods Hype Cycle, like those of previous years, does not have a technology with a transformational benefit that will mature during the next two years (see Figure 2). This is largely to be expected, as disruptive technologies are not typical in this sector. A good example is digital technologies, which could be disruptive in the B2B sector, but have a much more dissipated impact on consumer goods. It is also due, in part, to the adoption profile of consumer goods companies and is exacerbated by a cautious environment, where companies are being conservative in their technology investments. This trend is likely driven by consumer goods companies' reticence to embrace transformational technologies quickly and some of the commodity cost pressures that are impacting overall operations. However, Retail Mobile Shopping (Nonpayments), Operations Intelligence and Trade Promotion Optimization offer the ability to transform their categories over the two-to-10-year horizon. This is an interesting combination because Retail Mobile Shopping (Nonpayments) and Trade Promotion Optimization can impact the offer that is given to the consumer in the grocery store, while Operations Intelligence is focused on making sure the items are available from the supply chain. Hence, multiple areas across the enterprise will benefit. PLM solutions continue to provide high benefit in the two-year-plus time frame as computer goods companies seek to accelerate new product innovation and manage existing product portfolios. This is largely unchanged from last year. But the growing theme for 2013 is more consumer-centric technologies. By this we mean those that impact what drives the consumer to the store shelf and what the experience will be at the moment of making a purchase decision. We expect to see not only high-impact technologies exerting their influence two to 10 years in the future, but also more of them. This is a significant theme in the Hype Cycle as shipping becomes more social and more visceral to orchestrate and optimize product/packaging development initiatives, from planning through end of life. Solutions with moderate potential (such as consumer packaged goods e-commerce) provide manufacturers with a direct-to-consumer revenue channel, offer new insight into shopper behavior and increase collaboration with retailers. Maximizing these benefits necessitates broad integration with existing applications, and involving internal and external stakeholders. In other words, it requires an agile organization and strategically focused executive management. The tight alignment of IT initiatives with business priorities will facilitate the quick achievement of specific short-term objectives via a phased rollout, because these solutions encompass multiple applications.
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Figure 2. Priority Matrix for Consumer Goods, 2013
benefit
years to mainstream adoption

less than 2 years 2 to 5 years 5 to 10 years
Operations Intelligence Retail Mobile Shopping (Nonpayments) Trade Promotion Optimization
more than 10 years
transformational
high
Crowdsourcing Demand Signal Repository Enterprise Manufacturing Intelligence Merchandising and Category Optimization Multiechelon Inventory Optimization PLM for Apparel, Footwear and Accessories PLM for Durable Consumer Goods PLM for Packaged Food, Beverages and Personal Care Products Social Analytics Social Media Marketing Platforms Trade Promotion Management (C&SI)
Augmented Reality Marketing Mix Modeling Master Data Management for Consumer Goods Real-Time Customer Offer Engines Retail Activity Optimization Virtual Store Research
moderate
2D Bar Code Marketing Content Marketing Digital Offers MES Applications Retail Digital Coupons Social Gaming Ad Networks Stages 2 and 3 Sales and Operations Planning
Climate-Driven Forecasting Consumer Goods E-Commerce Gamification Intelligent Image Interpretation Manufacturer In-Store Monitoring Analytics Quality Process Management Applications
low
As of July 2013
Off the Hype Cycle

There were several name changes to entries on this year's Hype Cycle. Consumer Packaged Goods E-Commerce was changed to Consumer Goods E-Commerce to focus on manufacturers of all
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types of consumer goods selling products directly to consumers. Social Coupons and E-Coupons have been consolidated into Retail Digital Coupons to reflect the growing maturity of digital coupons in retail. Mobile Coupons was expanded and renamed Digital Offers to include offers like daily deals or specialized and targeted offers from retailers while shoppers are on the go. Finally, Inventory Strategy Optimization was renamed Multiechelon Inventory Optimization to reflect the inclusion of other facets of the supply chain (for example, sourcing, pooling and replenishment strategies) to support the development of segmented supply chain response strategies for customer and channel segmentation. Promotion Execution Monitoring has been taken off the Hype Cycle due to component technologies being absorbed into other technology classes such as Manufacturer In-Store Monitoring Analytics, Intelligent Image Interpretation and other point of sale (POS) analytics applications. Retail Execution and Monitoring has also been removed after having become sufficiently mature. But a new manifestation of it, Retail Activity Optimization, includes the same underlying transactional capabilities but gives guidance and direction on which stores to visit and what to do while there in order to yield the greatest return on time and resources. Thus, Retail Execution and Monitoring effectively lives on, but in a more outcome-driven version. Assortment and Space Optimization was removed and replaced by Merchandise and Category Optimization to reflect changes in how retailers are viewing these merchandising activities and how manufacturers can support them as category captains.
On the Rise
Virtual Store Research
Analysis By: Don Scheibenreif; Marc Halpern; Janet Suleski Definition: Virtual store research utilizes sophisticated online 3D renderings of store environments that enable consumer goods (CG) manufacturers and retailers to visualize merchandise and space planning scenarios, and study consumer behavior in simulated shopping situations. Position and Adoption Speed Justification: Today, most retailers and CG manufacturers visualize space, like shelves, racks or aisles, using flat 2D software applications, or store shelves in actual retail or mock "laboratory" stores. Virtual store research changes this by using animated 3D online environments that can be delivered on a variety of devices, such as a laptop, a tablet and a full-size "virtual store laboratory." These applications are challenging the traditional 2D view of space and assortment planning and consumer research. Video game-quality 3D environments have been created for a number of retail channels selling consumer products, including mass merchandise, grocery, drug, convenience, apparel and hardware stores. These technologies enable the testing and simulation of multiple scenarios that would otherwise be cost prohibitive if done in a physical environment. Retailers are just beginning to explore this opportunity. Gartner primarily sees Tier 1 manufacturers and retailers using these technologies, but we are also seeing signs that Tier 2 and Tier 3 players are becoming interested in the benefits of this technology. Space planning in grocery stores and consumer market research is a very mature business process, with established technologies and
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vendors. Changing these long-standing behaviors, and getting retailers and CG manufacturers to use this new visualization technology in place of existing technology investments and vendor relationships, are the biggest barriers to adoption of virtual store research technology. User Advice: IT professionals and shopper marketing or category management professionals in CG companies should pay attention to these technologies, especially if you are looking for advancements to help reduce the costs of in-store or in-market testing programs, and to better prepare your sales organizations for selling new products and new promotions. If you are a Tier 2 or Tier 3 CG manufacturers, consider using these innovative technologies to win category projects and leadership positions from larger competitors. All of the vendors listed below have experience in CG market research and understand retailers, which is critical. Most are U.S. based, with several newer firms in Europe and Latin America. Many of the vendors have project experience in Europe, South America and Asia, in addition to North America. Vendors will offer a range of capabilities, from pure market research to integrated space and assortment planning to process consulting. Startup investments will be required to construct the 3D shelf environments for a particular category of products and a particular retail environment if it has not already been constructed by the vendor. Once the initial investment is made, then it is a matter of updating images and running scenarios on a project or retainer basis. On the consumer research side, virtual store research should be viewed as one among multiple tools a CG manufacturer should use in the consumer and shopper insight process. Business Impact: Virtual store research tools can help both manufacturers and retailers save time and money in space planning, category management and consumer research through the simulation of multiple scenarios. By eliminating physical space as a constraint in planning and research, this technology helps take costs out of the process. It also creates innovation opportunities for both retailers and manufacturers by offering economical alternatives to creating physical virtual store labs. CG manufacturers can learn how consumers react to different concepts, and help their salespeople sell more effectively by showing retailers how their ideas will look in the retailer's environment. This insight can be used to help drive more-effective product launches, promotions and other merchandising concepts that drive revenue for both parties. On the consumer research side, it is also is a viable tool to drive greater collaboration between CG manufacturers and retailers because of the engaging, visual nature of the approach, along with the robust analytics built in to the applications. Short-term benefits aside, the expansion of this 3D technology among retailers to consumer-facing applications could signal what the future of shopping could look like. Benefit Rating: High Market Penetration: 1% to 5% of target audience Maturity: Emerging Sample Vendors: Dassault Systemes; Decision Insight; Fifth Dimension; InContext Solutions; IVD Shopper; Keytree; Nexium Customer Solutions; Red Dot Square Recommended Reading: "Cool Vendors in Consumer Goods, 2011"
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"Cool Vendors in Consumer Goods 2013"
Intelligent Image Interpretation

Analysis By: Dale Hagemeyer Definition: Intelligent image interpretation is a technology that transforms digital images of merchandised product displays and planograms, captured by a standard digital camera or smartphone in-store, into usable information and analytics. Pictorial views of the shelf displays and a series of analytics and statistical information can be produced to understand shelf conditions and drive merchandising actions that can lead to increased revenue and consumer satisfaction. Position and Adoption Speed Justification: Intelligent image interpretation analyzes the captured digital image through identifying color, package size and label design, as well as mapping these attributes against its reference data warehouse. This capability is early in its life cycle and is slowly developing the key capabilities needed to embed it successfully into production-quality applications and to integrate it with digital merchandising applications. This will enable manufacturers and retailers to better understand out-of-stocks, new product compliance, and shelf or display compliance. In 2012 and early 2013, we have seen substantially more interest in this area, which is driving rightward movement on the Hype Cycle. This is a result of both successful pilots and improvements in image recognition success above the 90% accuracy level. We are also seeing increased ability to capture pricing from shelf tags, which would further bolster KPIs about shelf conditions. User Advice: Consumer goods manufacturers looking for a quick and easy way to check in-store conditions should consider how simple digital images could lead to significantly greater compliance monitoring and richer insights that can inform their assortment planning and customer-specific shopper marketing programs. To derive the potential business benefits, the user must capture the digital pictures of the shelf (showing the products that have been merchandised), and then transfer them to the application for processing, to identify the products, count facings, and record product positions and shelf conditions. Despite the advances in technology, manual checks are still necessary, especially when it comes to identifying products in complex or very small packaging. Not all vendors cover all product categories, so expect a learning curve for the system if your products represent a new category. Be sure to review vendor development road maps to gauge investment and scaling of the technology. Business Impact: The main business benefits can come from the ease with which space-planning planograms can be compliance-audited quickly, allowing corrective actions to be taken simply by capturing a digital picture and processing it. Manual involvement in the process can help ensure correct interpretation of the captured image, but significant productivity gains can consistently be delivered versus existing methods. Therefore, the benefits include better planogramming, reduced costs of auditing and greater insight to in-store conditions. Benefit Rating: Moderate Market Penetration: Less than 1% of target audience
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Maturity: Emerging Sample Vendors: Accenture; Nexium Customer Solutions; Planorama; ShelfSnap Recommended Reading: "Cool Vendors in Consumer Goods, 2013"
Manufacturer In-Store Monitoring Analytics

Analysis By: Don Scheibenreif Definition: In-store monitoring analytics is a collection of service, software and hardware offerings used to capture observable behavior of shoppers as they journey through the store, interacting with individual sections and products. Using a combination of data inputs (video and sensors) and advanced analytics, this technology provides retailers and manufacturers visibility on actual shopper behavior in an unbiased environment, and analytics to inform the design and execution of more effective shelving, merchandising, display and pricing programs. Position and Adoption Speed Justification: These capabilities are still developing, and primarily involve tracking mechanisms such as video cameras or sensors to follow shoppers' movements and actions. Examples of metrics include total store traffic, traffic-to-aisle conversion (percentage of total shoppers who visit an aisle or section), engagement rate (percentage of shoppers who stop at the location), dwell time (how long shoppers spend in a particular location), purchase conversion (percentage of shoppers that purchase) and traffic flow patterns (how shoppers get to the location and shop the store). Prior to these technologies, consumer goods manufacturers obtained these types of insights through labor-intensive and expensive methods like in-store observation, shopalongs and video methods with manual tabulation. Consumer goods manufacturing adoption of this technology is still low and limited to Tier 1 companies, with the first few early adopters beginning to evaluate it, and experiment with it, as it relates to understanding shopping behavior at the shelf. They are motivated by the desire to create more effective shopper marketing and category management programs to increase the returns from rising trade spending. On the retailer side, a limited but growing number of grocery and convenience store retailers have contracted with vendors to deploy these services. Vendors will fund the startup costs, charge manufacturers for access to the information analytics, and share revenue with the retailer. To gain greater retail participation, vendors will have to help retailers understand the growth opportunities and operational benefits of these technologies beyond just measuring merchandising activity for consumer goods manufacturers. Also, consumer goods manufacturers will have to use the insights from these analytics to drive greater category sales growth. We expect these vendors to continue to build their store panels and learning laboratories for manufacturers and retailers, thereby increasing adoption of this technology over time. However, we are not seeing increases in adoption of this technology by consumer goods manufacturers. We believe this is due to several factors, including a limited number of test stores with a limited number of retailers, and an industry slow to embrace a new set of metrics represented by the technology. Hence, the position on the Hype Cycle has not changed from 2012.
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User Advice: Progressive consumer goods companies should consider this type of analytic technology service for their shopper insights team, because having personnel evaluate retail conditions is an expensive proposition due to travel costs and labor intensiveness. Users should evaluate the trade-off of using direct point of sale (POS) data, combined with in-store personnel, as opposed to paying for this type of service. Identify high-potential or high-growth categories that would benefit from new insight, and invest in a pilot test by working with your shopper insight team to identify a brand that has sales challenges. Business Impact: In-store monitoring analytics fills a critical gap in understanding the link between shopper behavior and purchasing behavior. Additionally, it helps manufacturers collaborate with retailers, because they both have a vested interest in driving traffic, increasing sales and improving the shopping experience by recognizing the retail store as the center of multichannel retailing. Retailers and manufacturers can determine whether shoppers are engaged, and whether planned merchandising tactics are working by anonymously tracking actual shopper movement in the store and how that translates to purchases. These analytics complement existing sources of data like POS data, loyalty data, and traditional attitudinal and observational shopper and consumer research. The insight developed from these tools leads manufacturers to make better merchandising recommendations, and creates value for retailers, manufacturers and shoppers. It helps answer these elusive questions that can't be understood by traditional research reports alone: How do shoppers shop brands and categories? How can you best engage them in-store? What would make them buy more, or more frequently? Being able to win at the point of decision, and at the store shelf, is still aggressively pursued, and having a digital image plus related metrics that can facilitate internal and external conversations based on facts, as opposed to secondhand perceptions, has real merit. Benefit Rating: Moderate Market Penetration: Less than 1% of target audience Maturity: Emerging Sample Vendors: Infosys; RetailNext; ShopperTrak; VideoMining Recommended Reading: "Overview of In-Store Monitoring Analytics for Consumer Goods Manufacturing" "Shopper Marketing in Consumer Goods Manufacturing Requires an IT Partner" "Predicts 2012: Demand Sensing Will Be Key to Success and Growth in Consumer Goods Manufacturing" "Cool Vendors in Consumer Goods, 2012" "Cool Vendors in Consumer Goods, 2008"
Retail Activity Optimization

Analysis By: Dale Hagemeyer
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This research note is restricted to the personal use of pia-marie.hamoy@hp.com Gartner, Inc. | G00252194
Definition: These technologies use advanced modeling (regression analysis and linear programming) to drive the activities that manufacturers want executed by field sales personnel dedicated to in-store activities, such as retail merchandisers, broker retail sales forces and direct store delivery drivers. The technologies include data accumulation and analysis, pushing the activities out to the field sales force through mobile devices (such as tablet PCs or handhelds), and collecting the inputs or outcomes from the mobile devices. Position and Adoption Speed Justification: In the past, this area was the subject of some experimentation and custom development, but is now gaining attention as consumer goods companies move from executing activities at retail to optimizing those activities. However, we didn't see much increase in penetration in 2012 and early 2013 because of data quality issues and lack of statistical modeling expertise at many of the vendors looking at this area. Given that trade promotion optimization is gaining momentum in the marketplace, it's only logical that the in-store execution that supports promotions should become a focus for optimization. Examples of the activities to be optimized include: Which stores to visit and not to visit

Optimal routing in order to visit a determined list of stores in the most logical sequence Recommended order quantities Prioritization and tasking of in-store merchandising activities, such as addressing products out of stock, auditing and building displays Activities that need to be executed based on predictive models to avoid an undesirable outcome, such as a product out of stock
Key inputs into the optimization may include direct point of sale (POS) data, syndicated POS data, shipment data and company imperatives. Other inputs could include fuel costs, personnel costs, distance to the store and so forth. It's important to note, however, that no single vendor is optimizing all the sales activities; hence, there are several vendors, but the space is too immature to have a consistent definition of what to optimize or how to do it. User Advice: Type A adopters (technologically aggressive) should be watching this marketplace through 2013 and be ready to commit as these products evolve, and as the vendors with optimization capabilities combine their expertise with vendors that have more-traditional retail execution and monitoring offerings. Type A adopters that are experiencing high degrees of pain in executing at retail may want to proactively engage their retail execution vendors to help shape this space. Type B (mainstream) adopters should continue to automate their retail execution capabilities by pushing activities out to the field via mobile devices, so that they will be ready when these capabilities mature. Business Impact: Business impact is high and will be higher as soon as the various approaches mature, and there's momentum behind optimizing a complete set of retail activities, as opposed to just one or two (such as route or order quantity optimization). Consumer goods manufacturers consistently identify the ability to execute better and "win at the shelf" as the top areas requiring
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improvement to drive competitive advantage. Given the increases to, and volatility of, fuel costs, getting more benefits from a retail store is critical. Also, the ability to direct the retail sales force toward the activities that will yield the greatest returns is very intuitive to user organizations. As a general rule, retail activity optimization has the most benefit where a delivery driver or salesperson has the possibility to not visit a set of stores, because inventory levels or store conditions do not warrant it. This can favor all retail execution models merchandising, van sales and direct store delivery. Benefit Rating: High Market Penetration: Less than 1% of target audience Maturity: Emerging Sample Vendors: Accenture (CAS); AFS Technologies; RW3 Technologies; Tactician; The TerrAlign Group; Visicom; Xtel Recommended Reading: "Vendor Panorama for Trade Promotion Management in Consumer Goods"
Retail Mobile Shopping (Nonpayments)

Analysis By: Don Scheibenreif; Miriam Burt Definition: These applications support consumers' ability to shop in consumer goods retail channels using their mobile devices. They allow retailers to provide consumers with shopping tools and promotional information that can enhance the shopping experience; some could also support mobile payment transactions. Position and Adoption Speed Justification: Over the past 12 to 24 months, a handful of large grocery retailers have launched these applications, whether they be browser-based, messagebased, downloadable to a mobile device or native applications that come preinstalled on the mobile device. Consumer goods companies have been participating in these efforts by contributing coupon offers and other forms of content, such as product information. The applications can support shopping activities, including the ability to find stores, browse items, build shopping lists, reserve items, "check in" to see whether their friends are in their vicinity, receive and review promotions, receive coupons, get and share in community reviews, check prices and inventory, check the status of their loyalty program points. Retailers can use these applications to conduct advertising and marketing, and to increase brand awareness and loyalty. Several grocery retailers have chosen to launch these nontransactional mobile websites and applications as "first steps" before implementing more robust mobile capabilities, including mobile payment. Consumer goods manufacturers have been participating in these efforts. Examples include Ahold USA's Stop & Shop, Michigan-based Meijer, and Casino in France. Walmart recently announced the expansion of its self-scanning consumer mobile application beyond its pilot of 200 stores. What makes these applications interesting is the potential to deliver context-aware content while a shopper is engaged in the shopping process. This involves determining a shopper's precise
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location in the store, and marrying that with a complex ecosystem of data and analytics that can deliver highly relevant offers at the point of decision. Today's applications are primarily focused on self-scanning and self-check-out, and potentially lay the foundation for a future of context-aware offers in real time. In the past 12 months, there has been escalation of activity and concomitant raised levels of hype on solutions in the broader retail market. The following factors have contributed to this:
The trend toward the convergence of mobile and social is growing with the rise of mobile social networking (for example, native mobile social networking sites such as Foursquare). Social networking websites have also been creating mobile applications to give their users instant and real-time access from their devices. Retailers' interest is increasing in activity around vendors' development of geofencing solutions, in order that geofencing data can be used in conjunction with push notification systems (for example, to push location-based offers to consumers in real time as they visit the store and use their smartphones to find and research products). A trend toward consumers using mobile applications on tablets in their homes has also caught the interest of retailers. The emergence of the HTML5 standard is expected to have a major impact on mobile technologies, especially in terms of portability across platforms.
For the grocery channel, we estimate that this specific grocery-focused mobile application is present in fewer than 1,000 actual retail stores. While these mobile technologies are accelerating among other Tier 1 retailers, the grocery channel is slow to adopt new technologies; hence, we see it at an earlier stage of maturity. A key barrier to the adoption of these technologies is manufacturerretailer collaboration. For these applications to realize their potential, there must be a significantly greater level of data sharing than exists today. That may change, however, if leaders like Walmart embrace the technology and expand it across their systems. User Advice: Consumer goods manufacturers should follow this technology carefully, as they will largely fund the development of these mobile applications through the discounts and offers they fund, and of other relevant content for shoppers. We think it will represent the next battleground for merchandising activity. Early adopters will want to have discussions and participate in pilot projects with vendors currently working with retailers on these types of mobile applications. They will need to learn how the applications work at their retail partner, what type of offers and content are most relevant, and how to leverage their unique insight of consumer and shopper behavior to drive revenue for themselves and their retail partners. Retailers themselves are learning how these applications can support customer service basics. Gartner retail consumer survey research indicates that "finding a store location" is the No. 1 priority in terms of the way consumers want to use their mobile devices. However, the ability to check stock availability, check and compare prices, read product reviews, and get promotions also ranked high on the list of things that consumers want to do with their mobile devices. Additionally, consumer goods manufacturers will want to:
Assess your organization's readiness to have discussions about context-aware offers.
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Take an inventory of your current context-aware and mobility strategies and capabilities. Integrate your own data (such as shipments, promotions and POS), and be ready for the next level of manufacturer-retailer collaboration Facilitate a move to trade promotion optimization, and use predictive modeling. Work with industry groups such as the Direct Marketing Association and the Grocery Manufacturers Association to develop regulations/policies/best practices concerning acquiring, maintaining and retaining consumer data.
Business Impact: According to the Point-of-Purchase Advertising Institute, 70% to 75% of purchase decisions for consumer goods are made inside the store. Delivering the right offer to the right shopper in the right precise location and in the right context represents the ultimate achievement of consumer goods marketing. Consumer goods companies that understand and know how to participate in this new technology will have a distinct competitive advantage over those that rely solely on traditional means of working with retail partners. While our retailer research indicates that, through 2016, most retailers expect mobile commerce (m-commerce) to influence 6% of overall revenue, we feel the mobile channel will be important in driving cross-channel revenue, and could influence a significant percentage of sales (completed in other channels). For example, a mobile application used to find the nearest store that has a desired item in stock may influence a customer to go to that store and purchase the item. Or, a review checked on a mobile site while a customer is in a physical store may push the consumer to purchase the item. One thing that could drive consumers to purchase via mobile devices is an increased use of flash sales by retailers, which adds a time element to a product sale or promotion. If this behavior becomes commonplace, retailers should evaluate adding commerce capabilities to all their applications and mobile websites. Benefit Rating: Transformational Market Penetration: 1% to 5% of target audience Maturity: Emerging Sample Vendors: Catalina Marketing; Point Inside; QThru; SAP Recommended Reading: "Me Marketing: Get Ready for the Promise of Real-Time, Context-Aware Offers in Consumer Goods" "Me Marketing: Prepare for the Challenges of Real-Time, Context-Aware Offers in Consumer Goods" "How Manufacturers Can Harness the Power of Tech-Savvy Consumers" "Survey Analysis: Tier 1 Retailers Must Capitalize on Consumer Use of Mobile as Key Gateway in Cross-Channel Shopping "
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Consumer Goods E-Commerce

Analysis By: Don Scheibenreif Definition: Consumer goods e-commerce enables consumer goods manufacturers to sell their products to consumers via the Internet through a variety of online and brick-and-mortar retail partners. Consumers can access these e-commerce sites directly through storefronts on brandspecific websites, online marketplaces or social networks using desktop or mobile devices. Position and Adoption Speed Justification: Consumer goods manufacturers have traditionally dabbled in e-commerce, often viewing it as a benign market presence to ensure access to the market, and to provide consumers choice in areas where their products are not offered. However, in the past several years, selling consumer packaged goods (CPGs) on the Web is seeing renewed interest and activity. Instead of having items delivered to the home for a fee in dedicated delivery trucks from retailers, new e-commerce sites are having goods shipped directly to the home via parcel delivery. Manufacturers have begun to change their expectations for e-commerce, viewing it as a viable means of responding to market shifts, generating revenue and developing a direct relationship with their consumers. In recent Gartner research, direct-to-consumer e-commerce was seen as the No. 1 channel investment priority for consumer goods manufacturers in the U.S. and U.K. Additionally, the ecosystem of service providers to support direct online sales of consumer goods (e-commerce hosting sites like PFSweb, distribution networks and parcel delivery like UPS) has matured, making it more efficient to aggregate and ship these items with point-to-point solutions. Category selection is still limited to household essentials on most sites, including personal and beauty care, household care, over-the-counter medicines, nonperishable food and beverage, and pet care. Grocery retailer sites like Peapod offer a wider range of products that you would find in a brick-and-mortar store. We classify these sites into two main categories:
Branded e-commerce site: Web and/or mobile site for online selling of products and/or services that is owned by the seller and operated either by the seller or on behalf-of the seller (for example, P&G eStore, Nike, Estee Lauder and Nespresso). On these sites, pricing is carefully managed so as to not undercut or alienate Tier 1 retailers. E-commerce marketplace site: Web and/or mobile site for online selling of products and/or services that aggregates the products of multiple sellers. The site is owned by the marketplace, and is operated either by the marketplace or on behalf of the seller (for example, Alice.com, Ocado, Amazon and its subsidiaries like Soap.com). Most sites offer free ground shipping with a minimum item or dollar purchase.
Consumers have become more comfortable shopping for items online that they generally would have purchased in person, and this trend is extending to everyday-use items normally purchased in trips to a retail store. Purchasing these items online saves time for consumers, and potentially eliminates a separate shopping trip and associated transportation costs. An increasing number of leading consumer goods manufacturers are experimenting with these e-commerce sites, either in sites with other brands or, in more cases, on their own brand-specific e-commerce websites. They are testing different e-commerce consumer-direct models to see whether there is value to the
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organization and to the consumer. The e-commerce platform technology is fairly standard, with the more innovative marketplace sites allowing users to create shopping lists, receive reminders to replenish frequently used items, and share experiences with friends via social applications. More and more retailers are experimenting with different e-commerce models, with the most popular combining online ordering with home delivery and in-store pickup. Online-only retailers such as Amazon and Ocado are also increasing their investments in the grocery channel by offering sameday delivery in some cases. We view this technology as a source of insight on consumer shopping behaviors, and a platform for experimenting with different types of offers as part of a manufacturer's shopper marketing initiatives. With e-commerce sales of consumer goods currently representing only 2% of CPG retail sales in the U.S., and projected to grow 25% per year through 2015 (according to Nielsen), we do not see e-commerce supplanting traditional brick-and-mortar retail stores. However, we do see the e-commerce platform technology as being a viable choice for consumers to purchase routinely used items, much like consumers split their shopping baskets among multiple retailers. These sites also offer manufacturers the opportunity to sell niche items that have a loyal following but don't justify shelf space. A key driver of adoption will be increasing selection on the marketplace sites, and making the experience as easy as shopping in a retail store, without alienating existing retail customers. The current limited item selection, paired with the consumer goods industry's slow pace of change, is why it will take five to 10 years for this technology to reach maturity. However, increases in the numbers of consumer goods companies selling at least some of their products to consumers directly online has resulted in advancing the maturity of this technology further up on the Hype Cycle. User Advice: Experiment with selling products on one or more of these platforms, as more and more manufacturers embrace this channel. In addition to your top-selling items, you can also sell niche items that might have low distribution or be slow movers at retail (such as specials, seasonal items and event-oriented products) but have a loyal consumer following. Or, even sell exclusive prerelease products online that could serve as an early indicator for broader production. Start with consumer segments that are already heavy users of e-commerce for their personal purchases. Avoid items that may not be practical to ship in consumer quantities, have high supply channel costs, and have high rates of return or risk conflict with your retail customers. However, as more spend shifts online, the more returns are to be expected (even if you are only shipping items that don't traditionally have high rates of return), and that is certainly what retailers are making provisions for. CPG companies that operate their own branded e-commerce sites have to ensure they have a smooth and hassle-free process to handle returns and customer service inquiries in general. Learning from retailers how they handle customer service issues could help you avoid embarrassing situations and maintain a good relationship with the consumer. Leverage the potential for consumer innovation and direct feedback on product performance by having a plan for what you will do with the data, and for how it will be translated into insights that can be leveraged in shopper marketing efforts for other channels, such as assortment planning, cross-merchandising, or promotional activity. In Asia, we are seeing manufacturers very focused on creating multichannel experiences for consumers that involve both their physical and online stores. For example, a retailer can increase stock in the brick-and-mortar store for items that are highly rated online. It is very important to share
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these insights with retailers to maintain a cooperative relationship. A lot can be learned, and several of the vendors provide fulfillment for retailers out of the same facilities. Understand the trade-offs between experimentation (which could jeopardize existing retail relationships) and sitting on the sidelines Business Impact: Direct selling of consumer goods enables manufacturers to develop a one-onone, database-driven relationship with consumers, and could provide valuable insight on purchase behavior that can be leveraged in high-revenue channels. These channels also offer a venue to sell items without the threat of private label. However, the business impact is low, given the low share of sales coming from this channel, and the still-emerging ability to leverage insights to other channels. Benefit Rating: Moderate Market Penetration: 1% to 5% of target audience Maturity: Emerging Sample Vendors: Alice.com; Amazon; Digital River; eBay (GSI Commerce); MyWebGrocer; Ocado; PFSweb; Soap.com Recommended Reading: "Optimization Strategies for Multichannel Consumer Electronics Retailers" "Cool Vendors in Consumer Goods, 2010" "Meet Alice. She'll Show You the Path to the Pantry." "Survey Shows Consumer Goods Manufacturers Must Embrace Digital Marketing to Maximize Impact"
Climate-Driven Forecasting
Analysis By: Noha Tohamy Definition: Climate-driven forecasting incorporates the impact of weather changes on future customer demand. Traditional demand forecasting has long accounted for the seasonal impact on customer behavior. Climate-driven forecasting is a logical extension that leverages improved analytics, and the availability of structured and unstructured data. Some of the climate-driven forecasting solutions exploit existing demand signal repositories, but others rely on proprietary databases. Position and Adoption Speed Justification: Despite having been in use in some aspects of the apparel and consumer products (CP) industries for more than 10 years, these capabilities are still limited in forecasting solutions. Most companies still rely on historical data to forecast demand, without incorporating the impact of real-time data like weather conditions. As such, the adoption levels of climate-driven forecasting haven't seen any significant increase over the past year.
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Additionally, this means that it will be more than five years before the impact of climate conditions is widely incorporated into consumer goods planning and forecasting. User Advice: Certain climatic conditions can have a significant effect on customer demand and the supply chain response. For CP categories that are clearly affected by the climate, clients should consider adoption to help improve their forecast accuracy. For CP categories that are not directly impacted by weather conditions, seasonality analysis might be a sufficient approach to account for weather changes. Business Impact: By combining weather insights with consumer and market insights, companies can enhance the accuracy of their demand forecasts. This, in turn, can be used to generate a better supply response in various areas like transportation, inventory and production processes. This can result in making more efficient and profitable decisions to meet customer demand. Benefit Rating: Moderate Market Penetration: Less than 1% of target audience Maturity: Emerging Sample Vendors: Climpact; Oracle; Planalytics; Weather Trends International Recommended Reading: "Predicts 2012: Demand Sensing Will Be Key to Success and Growth in Consumer Goods Manufacturing" "Next-Generation Supply Chain Predictive Analytics: A Cornerstone to Demand-Driven Value Networks"
Content Marketing
Analysis By: Jake Sorofman; Allen Weiner Definition: Content marketing involves the process and practice of creating, curating and cultivating text, video, images, graphics, e-books, whitepapers and other content assets that are distributed through media platforms and the social graph. These assets are used to tell stories that help brands engage with and nurture customers, prospects and other audiences. The goal of content marketing is to drive awareness, demand, preference and loyalty through deeper engagement with customers. Position and Adoption Speed Justification: Great content marketing is easier said than done. Many brands find themselves poorly equipped to become true content marketers. But that hasn't dampened the interest in this technique, which is fundamental to effective social marketing. Content marketing relies on digitally savvy workflows and creative techniques to reach consumers with highquality, authentic content that audiences want to consume and share. With both brands in search of tools and platforms to facilitate content marketing and customers hungry for engaging content, a substantial opportunity has emerged for new vendors focused on tools for automating and streamlining content creation, curation and activation. Today, the majority of these vendors have less than $10 million in annual revenue.
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User Advice: Assess your content marketing requirements in line with your social marketing programs. Consider partnering with content marketing, social marketing or digital marketing agencies to help bootstrap your efforts and investing in human capital (in the form of professional journalists) and technology that help you create a sustainable pipeline of high-quality content assets. Business Impact: When done well, content marketing can help brands generate awareness, demand, preference and loyalty through social and other earned media channels. Also, content marketing can complement paid media campaigns through content co-creation, sponsorship and native advertising programs available through many publishers and digital media properties. Benefit Rating: Moderate Market Penetration: 1% to 5% of target audience Maturity: Emerging Sample Vendors: Kapost; Percolate; PublishThis Recommended Reading: "Content Marketing Pushes Digital Marketers to Adopt Newsroom Habits" "Digital Marketers: Are You Ready to Think Like a Publisher?" "How American Express and Intel Excel at Brand Publishing"
At the Peak
Marketing Mix Modeling
Analysis By: Don Scheibenreif Definition: Marketing mix modeling refers to analytical solutions that enable marketers to maximize ROI on their marketing expenditures by determining the best set of advertising and targeted campaigns across various channels (offline and online) and media (traditional, digital and social). These technologies help companies better allocate resources and budget money to marketing programs and campaigns across the entire marketing mix, not just within the advertising or direct marketing silos. Position and Adoption Speed Justification: Recent advances in optimizing marketing spend across trade and consumer activities, and new entrants in the category, have caused interest to increase in the consumer goods industry, resulting in a slight movement up the Hype Cycle. Gartner's assessment of marketing mix modeling, a component of marketing performance management (MPM), is that it remains an immature area of marketing automation in terms of marketing adoption and solution sophistication. Challenges include the lack of prepackaged solutions, the inability to source the right data and the need for expertise in developing appropriate optimization models. Critics of marketing mix modeling from the media industry claim these models
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treat sales lift from marketing activity the same, potentially undervaluing awareness-building media in favor of in-store promotional activities. Although many firms want to optimize their marketing mixes, particularly with the current economic pressures, few are able to overcome the current challenges. Additionally, the decision to use a marketing mix modeling solution may have organizational and political implications, particularly the influence that an advertising or media agency would have on the chief marketing officer (CMO). Overall, we expect the economic environment to continue to constrain marketing budgets, which will drive the need to optimize marketing mix resources. With the consumer goods industry growth in the low single digits, Gartner expects that this will drive greater interest in and adoption of MPM solutions, and will drive software vendors to develop or acquire more robust, prepackaged capabilities. User Advice: This should be a top priority for consumer goods brand managers, because it gives them better insight into the cause and effect of brand-building activities and where they can get the best return on their marketing spending. This becomes even more important as segments of consumers become smaller and smaller with the advent of technologies like social media and predictive analytics. Users should evaluate the current methods of marketing mix analysis by partnering with brand marketing, agencies, finance and marketing analytics/BI to define currentstate available data and KPIs versus the desired future state. Agencies may see these models as a threat to their current way of advising clients on marketing spending. Including agencies in the development and pilot process will help them understand the benefits of marketing mix modeling by showing the impact of reduced budgets (to protect them from being cut) or increased media spending (which would benefit the agency). Deployments can take as little as three months, so users should look to quickly bring these capabilities online for use in planning for the coming year. With income volatility remaining high in the current economy, the simulation capabilities are key to understanding questions such as what the expected yield of marketing activities is across channels. Marketing analytics, business intelligence and finance functions should be heavily involved in deployments. Business Impact: Marketing mix modeling drives customer value and revenue growth by aligning resources with the highest-value opportunities, which promotes the best consumer and customer experience. Brand managers and CMOs can measure and achieve return on marketing investment (ROMI), use it to fuel their strategic planning, and make adjustments on an ongoing basis, rather than on annual cycles. This is especially important, as the diversity and number of channels to reach consumers has become increasingly complicated. Consumer goods organizations with which we've spoken have achieved very positive results by making this an element of the brand manager's toolkit. It takes some time to adapt to the additional rigor and to trust the algorithms, but the ROMI is significant because the implementations are quite rapid compared to those for trade promotion management. Benefit Rating: High Market Penetration: 1% to 5% of target audience Maturity: Emerging Sample Vendors: Accenture; Catalina Marketing; Dunnhumby; IBM (DemandTec); IRI; MarketShare; MMA; Nielsen; Oracle; ThinkVine
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Recommended Reading: "How Analytics Helps Consumer Goods Brand Managers With Marketing Mix Modeling" "Six Types of Providers for Marketing Performance Management" "Magic Quadrant for Marketing Resource Management"
Demand Signal Repository

Analysis By: Steven Steutermann Definition: Demand signal repository (DSR) is a centralized database that stores, harmonizes and normalizes data attributes, and organizes large volumes of demand data such as point of sale (POS) data, wholesaler data, electronic data interchange (EDI) 852 and 867, inventory movement, promotional data and customer loyalty data for use by decision support technologies (category management, account team joint value creation, shopper insight analysis, demand planning forecast improvement, inventory deployment, replenishment and transportation planning). Position and Adoption Speed Justification: While the term "DSR" is often misunderstood, with confusion existing between account-specific solutions and enterprise solutions, the use of DSRs by sales, marketing and supply chain teams continues to expand. As a result, DSRs are maturing, and solutions are being actively sought by leading organizations to differentiate their product and service offerings. Cash remains king, and driving continued interest in DSRs is the need to better target and reach consumers, improve cash flow and reduce working capital requirements between trading partners. The consumer products industry is active in piloting, learning and scaling DSR solutions across the enterprise. Industry adoption will continue as rising expectations to manage cost, service and inventory between trading partners continue to increase. For now, DSRs remain at the top of the Hype Cycle, pending further investment and scaling of DSR solutions across the enterprise, as well as the anticipated future use of unstructured data. User Advice: Sales and marketing departments within consumer goods manufacturers, with a specific interest in account-related information and market trends, may want to ensure that the adoption of DSRs is focused on the specific retail and wholesale accounts that are important to the business, rather than trying to address all corporatewide reporting and analytics requirements. Similarly, supply chain organizations will want to ensure that their needs, such as improved forecast accuracy, inventory management, customer service, on-shelf availability and retail compliance, are covered in the solution. Given that there are many potential solutions in this area, focus on those that provide insightful analytics, tied to business strategy and joint value creation between trading partners. Business Impact: The analytic capabilities of DSRs can provide a framework from which to drive the operations of a consumer goods business, and to drive a wide spectrum of planning and information systems. DSRs are more than just a single version of the truth. They can also be a critical tool to identify new sales opportunities, manage stock more effectively, drive agile responses, provide a basis for business forecasting and planning, and link suppliers to downstream data.
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Benefit Rating: High Market Penetration: 1% to 5% of target audience Maturity: Emerging Sample Vendors: Acosta; IRI; JDA Software; Nielsen; Oracle; Orchestro; Relational Solutions; Retail Solutions; Retail Velocity; SAP; Shiloh Technologies; Teradata Recommended Reading: "The Downstream Data Maturity Model for Increased Capability" "Use Downstream Data Collaboration as the Supply Chain Differentiator" "How to Differentiate Your CP Supply Chain With Metrics" "Why Not Use Downstream Data to Create Joint Value?" "Harness Downstream Data to Grow Your Top Line and Enhance Supply Chain Performance" "Harnessing Demand Signal Repositories to Enhance the Bottom Line" "Case Study: How ASM Is Redefining Field and Headquarter Services at Walmart With Downstream Data" "Why Is It So Hard to Turn Downstream Data Into Profitable Supply Chain Response?" "Kraft Foods Partners With Leading Retailers to Improve Trade Promotion Effectiveness and OnShelf Availability"
Gamification
Analysis By: Brian Blau; Brian Burke Definition: Gamification is the use of game mechanics and design to drive engagement in a target audience for nongame purposes to achieve a target business outcome. Many types of games include game mechanics, such as points, challenges, leader boards and incentives, that make playing games enjoyable. Gamification applies these game mechanics to motivate the audience to higher and more meaningful levels of engagement. Humans are "hard-wired" to enjoy games and have a natural tendency to interact more deeply in activities framed in a game construct. Position and Adoption Speed Justification: Gamification is used to change behavior, develop skills or drive innovation. Some examples of gamification's many uses include customer engagement, education, employee performance, innovation management and healthcare. While the concepts behind gamification are not new, its first use in 2007 coalesced specifically around using game mechanics derived from video games. Today, gamification is gaining traction in the enterprise. But its current "sweet spot" is the consumer market, which has the most deployments and gamification is integrated into marketing campaigns, customer loyalty programs, product design of mobile apps and services, and is intended to increase customer interaction and engagement. The fastest-growing segment of gamification is internal-facing enterprise uses, in
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which it is deployed to increase employee engagement in areas like training, innovation management, collaboration and employee performance. This trend is set to accelerate as larger vendors, such as salesforce.com, begin to integrate game mechanics and analytics into their software offerings. Early adopters, such as consumer brands and services, and mobile apps, show that gamification has had significant positive impact on user engagement rates when applied in a suitable context. However, gamification also has significant challenges to overcome before widespread adoption occurs. Designing games is no easy task during four decades of video game development, many games have failed despite developers' best intentions. A basic level of game mechanics (points system, leader board, achievements, awards or basic challenges) is often not enough to sustain increased engagement, as incentives and rewards must be aligned to motivate the target audience. Gamifying activities represent another challenge, one that requires careful planning, execution and iteration. Overcoming these challenges will require successive integration of gamification in a wide variety of consumer and enterprise scenarios. User Advice: Gamification can increase user interactivity and change behaviors, resulting in greater user engagement. When fun is built into the interaction model, users are more likely to continue to engage. Gamification has many uses that target consumers, customers, employees or any other defined audience, and it impacts many areas of business and society. Organizations planning to leverage gamification must clearly understand the target audience they intend to engage, what behaviors they want to change, what motivates the audience and maintains their engagement, and how success will be measured. Gamification technology comes in three forms;
General-purpose gamification platforms delivered as software as a service that integrate with custom-developed and vendor-supplied applications Purpose-built solutions supplied by a vendor to support a specific usage (for example, innovation management or service desk performance) Purely custom implementations
Organizations must recognize that simply including game mechanics is not enough to realize the core benefits of gamification. Making gamified solutions sufficiently rewarding requires careful planning, design and implementation, with ongoing adjustments to keep users interested. Designing gamified solutions is unlike designing any other IT solution, and it requires a different design approach. Few people have gamification design skills, which remains a huge barrier to success in gamified solutions. Enterprises trying to encourage new employee behaviors can use gamification as motivation. Organizations are beginning to use gamification as a mechanism to inspire and reward new initiatives, and to recognize contribution and participation that augments and furthers the purpose of their businesses and their customer communities. Implementing gamification means matching
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player goals to target business outcomes to attract and sustain a deeper level of interactivity, relationship or engagement with users. Business Impact: Gamification techniques can be used in a wide range of scenarios to enhance product and service strategies. Its use is relevant, for example, to marketing managers, product designers, customer service managers, financial managers and HR staff, whose aim is to bring about longer-lasting and more-meaningful interactions with customers, employees or the public. Although gamification can be beneficial, it's important to design, plan and iterate on its use to avoid the negative business impacts of unintended consequences, such as behavioral side effects or gamification fatigue. User engagement is at the heart of today's "always connected" culture. Incorporating game mechanics encourages desirable behaviors, which can, with the help of carefully planned scenarios and product strategies, increase user participation, improve product and brand loyalty, advance learning and understanding of a complex process, accelerate change adoption, and build lasting and valuable relationships with target audiences. Benefit Rating: Moderate Market Penetration: 1% to 5% of target audience Maturity: Emerging Sample Vendors: Badgeville; BigDoor; Bunchball Recommended Reading: "Technology Overview for Gamification Platforms" "Business Model Games: Driving Business Model Innovation With Gamification" "Gamification: Engagement Strategies for Business and IT" "Best Practices for Harnessing Gamification's Potential in the Workplace" "Gamification: The Serious Side of Games Can Make Work More Interesting"
Real-Time Customer Offer Engines

Analysis By: Robert Hetu Definition: Real-time customer offer engines have the ability to create personalized promotions for a specific customer or customer segment by taking real-time interactions and transactions, and using advanced analytics to determine the "best offer" in real time that can be delivered to the customer. These systems are becoming context-aware to formulate an offer for example, consumers' locations shared by their mobile phones or consumers' social network activities can be used to create more relevant offers. Position and Adoption Speed Justification: Gartner estimates continue to show that only 1% to 5% of Tier 1 retailers use real-time offers. Three trends continue to converge and support increased
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interest in and adoption of real-time customer offer engines. First, the ability to access contextaware, real-time information on customers is increasing (for example, customers' locations communicated via their mobile phones). Second, advances in database and cloud computing are significantly increasing the analytical capability to produce real-time offers. Third, some consumers are becoming more receptive to receiving and requesting promotions "in the moment" (for example, on their mobile devices and via Twitter). The ability to create customized promotions has been in use in retail for a while. This is typically executed as an offer based on a specific item purchased and issued at the point of sale or delivered with a customer receipt. However, store offers were not determined in real time. Rather, they were determined in days/weeks prior using data that was available at the time. In fact, many customer offers and promotion analytics remain activities that are predominantly not done in real time (except on the Web). In the next few years, Gartner expects that real-time customer offer engines will converge with online product recommendation on the Hype Cycle. User Advice: Creating a compelling offer requires more than just promotional algorithms. Retailers that are considering real-time offer engines will require good customer data (ideally, across all interaction channels), context-aware data (for example, location), and a vehicle by which customers can receive and respond to offers. Real-time customer offer engines should be evaluated not only on their science, but also for their speed and ability to be integrated into any customer process in any channel. Even if the engine is fast, the way it retrieves and delivers an offer can be constrained by the performance of the delivery systems, which defines the customer experience. Retailers should not attempt to supply customers with real-time, customized, 1-to-1 ratio offers until they are confident that they have adequate segmentation and behavioral analysis. The promise to provide meaningful, relationship-building and relevant offers can frustrate or offend consumers if they arrive late or seem irrelevant. Business Impact: Real-time customer offer engines are designed to improve sales, margins, satisfaction and frequency of visits. Benefit Rating: High Market Penetration: 1% to 5% of target audience Maturity: Emerging Sample Vendors: FICO; Fujitsu; IBM; Infor; NCR; Oracle; Retalix; SAP; SAS; Teradata Recommended Reading: "CRM Vendor Landscape: Multichannel Customer Analytics Is a Critical CRM Capability" "Cool Vendors in Retail, 2013" "Survey Analysis: Tier 1 Retailers Must Capitalize on Consumer Use of Mobile as Key Gateway in Cross-Channel Shopping"
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"Personalization and Context-Aware Technology's Impact on Multichannel Customer Loyalty"
Crowdsourcing
Analysis By: Carol Rozwell Definition: Crowdsourcing is the processes for sourcing a task or challenge to a broad, distributed set of contributors using the Web and social collaboration techniques. Crowdsourcing applications typically include mechanisms to attract the desired participants, stimulate relevant contributions and select winning ideas or solutions. Position and Adoption Speed Justification: Crowdsourcing is being successfully applied to narrowly-defined tasks, open-ended challenges or simply calls for ideas. It can be used internally or externally and, in either case, can be available to any participant or confined to a group of experts. Successful crowdsourcing requires the sponsoring organization to:
1.
Specify the task or challenge (including time frame for responses, guidelines and rules) and notify potential contributors. Manage payments. Assess intellectual property (IP) implications. Ensure some level of quality control regarding access, contributions (particularly if prizes or payments are involved) and voting.
2. 3. 4.
In its broadest sense, crowdsourcing can be viewed as synonymous with collective intelligence, that is, Web-mediated mass-collaboration such as Wikipedia or open source. However, it is more often used to refer to a focused effort by a company or organization to achieve a specific task, or identify opportunities, by drawing on contributors outside the immediate control of its management or contractual structures. Crowdsourcing has been applied in a range of areas in government and private sector organizations for nearly a decade, with rapid acceleration in its use during the past two to three years for idea generation in organizational innovation programs. Innovation activities where customers or "the collective" create and rank ideas, or design marketing campaigns, are the most popular. These crowdsourcing activities generate ideas that are increasingly selected through voting by participants with the final selection made and developed by the organization's employees. As more people interact on the social Web, providing frequent updates on their location and activities, crowdsourcing all types of status information mixed with context information becomes practical. For example, drivers can alert fellow "road warriors" to traffic conditions, travelers can offer suggestions for good restaurants nearby, and knowledgeable people can answer other people's questions. There is large, untapped potential in applying crowdsourcing to a much broader range of tasks and goals. However, there is still more to be learned and experienced about where the practice is most effective compared with other approaches. The tools to establish a crowdsourcing environment,
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particularly those involving recognition incentives or micropayments, are becoming widely available. However, as with any technology, effective practices in crowdsourcing remain the critical success factor. User Advice: Look for creative ways to use crowdsourcing, beyond idea generation. Consider tasks that can be broken down into smaller chunks and attacked in parallel such as classifying images as candidates for crowdsourcing. Use crowdsourcing for innovation in areas that can be focused and well-defined as a challenge. Look, in particular, for opportunities to crowdsource tasks to which volunteers (internal or external) would be prepared to contribute. Also, extend your ability to innovate or resolve these tasks in a resource-constrained environment. Government organizations are particularly well-positioned to take advantage of the willingness of citizens to help out in areas that affect their local environment or special interests. Also, when employing crowdsourcing with nonemployees, be prepared to grapple with IP issues. In some cases, you will reveal your own IP (for example, your internal or future plans) to outsiders. In other cases, you will need to deal with the terms of IP ownership for any relevant contributions from external participants. Business Impact: There are multiple areas of business impact:
There is the potential to open your innovation efforts by stimulating and capturing creative ideas from outside your organization. Companies like Heineken are crowdsourcing ideas for nightclubs and new package designs, and Volvo is using Facebook to ask consumers how they use the space in their cars. Crowdsourcing offers the ability to dramatically increase the available human resources that can be applied to a task or challenge well-designed crowdsourcing efforts will attract interest and creativity to a task.
There is an opportunity for organizations to crowdsource core business competencies, extend their access to key capabilities and change their associated cost structures. Benefit Rating: High Market Penetration: 5% to 20% of target audience Maturity: Adolescent Sample Vendors: Amazon; Clickworker; CloudCrowd; Crowdcast; CrowdFlower; Directly; IdeaScale; InnoCentive; Quora; TopCoder Recommended Reading: "Maverick* Research: Crowdsource Your Management of Operational Risk (The Supply Chain View)" "Who's Who in Innovation Management Technology" "Predicts 2013: CRM for Customer Service and Support in the Age of the Everywhere Customer"
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"Market Insight: Future of IT Services, 2020; the 'Survival of the Fittest' Scenario"
Operations Intelligence
Analysis By: Simon F Jacobson; Leif Eriksen Definition: Operations intelligence (OI) takes manufacturing data beyond the traditional reporting facilitated by enterprise manufacturing intelligence (EMI) applications. It incorporates business process management (BPM) and business intelligence (BI) disciplines. This focus on a greater range of data and information enables organizations to place manufacturing's performance in the context of longer-term business outcomes. Position and Adoption Speed Justification: As companies demand more predictability from their manufacturing operations, demand for analytical capabilities that enable a feedback loop between business performance and manufacturing capabilities increases. Real-time environments need near-real-time information. Early adopters of EMI are looking for more than the historical, descriptive, and post facto analytics provided by their current dashboards and widgets. EMI provides a mechanism for data capture, aggregation and analysis. OI goes a step further than EMI by incorporating the creation and management of data models, using data mining and discovery tools, and leveraging simulation and scenario analyses to monitor and add context to the large volumes of data generated from complex production processes that are housed within distributed and heterogeneous plant systems. It also adds business process management (BPM) discipline to enable an event-driven architecture that supports the ability to report and act on realtime discovery of events, not just alarms. It also helps guide operators or targeted stakeholders to the appropriate actions. The end goal is to create an architecture that places real-time operational data (such as asset availability and capability, work in process, test and quality status, and inventory movements) in a more holistic and actionable business context. Currently, Gartner sees more adoption in strategy and pilots than in wider-scale deployments. The emergence of enterprise use cases looking at this level of architecture has pushed it closer to the peak from its past position. As more commercially available offerings continue to emerge from industrial automation providers like GE Intelligent Platforms or specialist providers like Savigent Software, when systems become easier to deploy (via exploiting cloud and mobile technologies) than today's "build it yourself" architectural frameworks to stitch together multiple applications and as companies report back business value, the maturity will progress, and a shorter time to plateau can be anticipated. User Advice: Do not confuse OI with EMI. This is more than reporting and isn't a capability that's easily achieved with traditional BI applications or data warehousing techniques and skill sets. Realtime environments need real-time systems. Specialty vendors and skill sets are required. Here are two key points to consider for companies starting this path: Identify suitable uses cases that can span scenarios across new product design and introduction (NPDI), asset performance management, energy efficiency, quality, contract manufacturing,
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customer sales and aftermarket services, and manufacturing network design. A prevalent scenario is one where a chemicals producer is combining historical data and unit metrics on asset performance, cost factors and process cycle times by shift, day and month with current standard process models and real-time performance data from the automation and controls layer with ERPbased data. It has created simulation models that use current and historical performance data to predict the impacts of unplanned changes in energy and material costs on asset performance and total margins. Over time, this will impact decision making on production sequencing, product portfolio management and activity-based costing. Define how real-time OI needs to be. Identify which users need what information and when to support advanced decision making. Also, ensure that information usage, value and dissemination happen quickly and efficiently. Business leadership from manufacturing, supply chain and IT must share responsibility when deciding where the information should be used and building the business case. Business Impact: OI delivers manufacturers an ability to mine, model, manage and simulate operations data over an extended hierarchy of time scales and business priorities that extend significantly beyond the production environment. It's the foundation for a closed-loop capability that enables a knowledge-based enterprise where not only executives, but functional workers, have access to the kinds of analytics they would not otherwise have. Overall, this increases visibility into how the company is running and what is happening in its external environment. Individual contributors and managers have improved situational awareness, so that they can make faster and better decisions based on high-quality information that's extracted and distilled from multiple data points. Benefit Rating: Transformational Market Penetration: 5% to 20% of target audience Maturity: Emerging Sample Vendors: Apriso; AspenTech; Camstar; Dassault Systemes; GE Intelligent Platforms; Invensys Operations Management; Microsoft; Rockwell Automation; Savigent Software; SAP; SAS Recommended Reading: "The Nexus of Forces Is Ready to Advance Manufacturing 2.0" "The Manufacturing Performance Dilemma, Part 2: From Enterprise Manufacturing Intelligence to Operations Intelligence" "Operations Intelligence Adds Context to Manufacturing Metrics That Support DDVN Goals" "Asset Management in DDVN, Part 2: Data Shows Performance Improvements Are Within Reach"
Social Media Marketing Platforms

Analysis By: Julie Hopkins; Andrew Frank
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Definition: Social media marketing platforms supply tools, templates and services that enable the creation, maintenance and optimization of commercial presence in online social environments, including social applications and promotions for marketers and media companies. Most are specific to networks and services, such as Facebook, Twitter, LinkedIn and YouTube, but support for newer platforms, such as Pinterest, is on the rise. Position and Adoption Speed Justification: With the increased adoption of social media marketing platforms to support broader operations, the refinement of offerings, and the integration of acquired features into platforms, we see where platform offerings are moving off the peak, and within the next two to five years, will move into mainstream productivity. The rise in consumer involvement with social media over the past five years has transformed social media marketing from a mystery to a necessity for most consumer brands (and many B2B brands as well), for whom Facebook fan pages have become a baseline requirement. Although social marketing in general remains a broad and fragmented concept, covering activities from microblogging to app design to monitoring and analysis to social CRM workflow, a clear category of products with a fairly consistent set of core capabilities has emerged around the concept of establishing, growing and maintaining social presence for brands. However, there is still considerable variation among their more advanced features, as well as their overall breadth of scope. Social media marketing platforms first emerged in 2006 and 2007, and they have grown steadily since then. In the last two years, acquisition and consolidation have been the name of the game, as large vendors work to piece together complete social marketing solutions. Alongside the acquisition activity, smaller "freemium" vendors have established a strong client base and have advanced their functionality, expanding the number of solid options in the market. These platforms have now gained widespread acceptance among brand marketers, and despite the wide range of new and existing point solutions still available for social marketers, we expect consolidation to continue as more "megavendors" race to shore up social media and cloud credentials. Given the overall positive market reception to this category and its association with both social and cloud computing, we expect these tools to be incorporated in many general marketing suites and social CRM packages within a few years. User Advice: Social media marketing platform users should continue to focus on the following:
Refine social media marketing objectives and capabilities in line with business goals and rapidly evolving marketplace realities. Your first step should be to define a social media measurement strategy that will track progress against objectives, and support the strategy with consolidated metrics and analytics to gain visibility into the effects of social media marketing activities. While most social media marketing platforms supply metrics and analytics, integrating various sources at scale, to get the big picture, remains a challenge. Address the challenge of how social media marketing is establishing cross-divisional governance. Many groups are focused on social media from various angles: customer services, sales, public relations, branding, security and so forth. Social media engagement, however, must operate from a consistent set of principles and guidelines to present as much as possible a unified brand image. This makes adoption of social media marketing platforms
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more difficult, as they tend to expose rifts in governance, and marketing must recognize the need for buy-in and participation from more than its usual core constituents.
Examine how the properties in your digital Web ecosystem work in concert with one another. Your brand site may not achieve as much status as your social destinations, but the latter cannot replace the former. Consider what properties work most effectively to deliver what types of content, to host applications, and to make connections and linkages, and how each generates different types of traffic and buzz. Develop a process to evaluate and incorporate feedback. Marketers should consider input and feedback from social media environments to be at least as important as their outbound activities, and they should use social media as an ad hoc research tool to stimulate and gather new ideas and areas for improvement, to promote loyalty and evangelism, and to refine their sense of the voice of the customer. Most importantly, marketers must plan for social presence to be a long-term commitment. Unlike campaign-based marketing efforts, maintaining social presence is not a periodic discretionary activity, and inactive fan pages and other community destinations are an invitation to detractors and vandals. Campaigns may work through social channels and may thus drive periods of higher (versus lower) activity.
Business Impact: As social media marketing matures as a discipline, and as the ROI of investing in these programs continues to be explored and revealed, these platforms will become an increasingly meaningful part of the tools employed by marketers to manage campaigns. The insights, alone, that can be revealed through use of these platforms can greatly shift what marketers have the opportunity to do. Social media is a data-rich environment, and mastering the data associated with it is a key to using it effectively for marketing purposes. While most social media marketing tools have stand-alone analytic dashboards, integrating this data with other sources, such as sales and CRM, leads to new requirements for more powerful data analytic tools and platforms. These tools and platforms, in turn, must be exposed and integrated with outbound marketing efforts. Benefit Rating: High Market Penetration: 5% to 20% of target audience Maturity: Adolescent Sample Vendors: Adobe; Expion; Lithium; Oracle; salesforce.com; Spredfast; Sprout Social Recommended Reading: "Learn Best Practices for Adopting Social Marketing Technology" "Top Use Cases and Benefits of Social for CRM in 2013"
Sliding Into the Trough

Digital Offers
Analysis By: Mike McGuire
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Definition: Digital offers are communications from daily deal sites and aggregators, flash sale sites, group buying sites, and related time-based promotion support and infrastructure services for merchants and marketers. Digital offers can be sent to consumers via multiple channels and in multiple ways, including from within a browser page, email, social network, or social media site or application, and they can be sent to mobile devices via an SMS message, dedicated application, or other mobile technology. Position and Adoption Speed Justification: For 2013, we've consolidated "Mobile Coupons" under the broader topic heading of "Digital Offers" to better reflect the spectrum of opportunities in marketing and sales. In our Hype Cycle, the "Digital Offers" category has moved quickly from being located just shy of the peak in 2012 to descending into the trough this year. Early entrants, such as Groupon and LivingSocial, initially rode a wave of aggressive pyramidlike geographic expansion that hid operational risks and long-term merchant value questions. The market became saturated, bringing this category quickly back to earth. Despite the early hype, we anticipate digital offers, including e-coupons, will increase in popularity because of several factors:
Consumer adoption of smartphones, accompanied by the devices' context- and location-aware capabilities, plus social applications. Mobile devices (smartphones and tablets) accounted for 48% of time spent shopping online in the first quarter of 2013, according to comScore. And 34% of smartphone users shop online while in a store (aka "showrooming"), according to Compete.com. The desire of retailers and brands to improve their ability to personalize and develop more relevant offers in real time. The availability of applications that give consumers a tool to manage and use digital offers, such as Apple's Passbook and Google's enhancements to Google Wallet. These tools enable users to store and manage digital offers ranging from simple coupons to airline e-tickets, to loyalty program offers in the app, as opposed to having to access and manage them from separate apps. The offers can be time- and date-specific, and can offer context-aware functionality. For example, a ticket to a movie bought from Fandango can be dropped into Passbook and send reminders to the user regarding the date and showtime for the movie.
Gartner is also increasing the market penetration rating for digital offers in 2013 to 5% to 20% of the market because major retailers and brands are starting to see the results of various campaigns and grasp the potential for digital offers. User Advice: Because there are a number of tech vendors targeting this space, it is relatively easy to implement a digital offer, such as mobile coupons. Gartner cautions marketers to recognize the impact of deep discounting on brand equity and customer loyalty. Bargain hunters often prove to be fickle customers, or even critics, while loyal fans may react negatively to seeing discounts from favored brands, especially if they recently paid more.
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Marketers should look to take advantage of apps such as Passbook and Google Wallet that make it easier for consumers to use and manage digital offers. Businesses should be prepared to adopt technology that gives consumers the ability to access and redeem coupons in any channel. Tight integration between campaign management systems and the couponing systems of the brand manufacturers will be required. Retailers must monitor the relevancy of their offers and play an active role in managing customer opt-in and privacy settings to avoid spamming customers. Business Impact: The biggest advantage of digital offers is that they can be delivered through multiple channels especially mobile devices. Digital offers, such as passes designed for couponmanagement apps, can have the added value of leveraging basic context-aware functionality (for example, notifying the consumer about the offer's expiration date). Digital offers are also a great way to get customers and prospects to opt-in and receive future communications and offers from your organization. You can get additional insight into who is claiming offers and what messaging and offers are the most impactful. Benefit Rating: Moderate Market Penetration: 5% to 20% of target audience Maturity: Emerging Sample Vendors: Cellfire; Coupons.com; Groupon; Scanbuy; You Technology; Zavers Recommended Reading: "How Can Retailers Get Started in Mobile Commerce?" "Mobile Consumer Shopping Preferences, 2010: U.S." "Creating Real-Time Personalized Offers for Consumers" "Consumer Survey Shows What's Ahead for Retail Coupon Management"
Retail Digital Coupons

Analysis By: Edmond Jeannot; Robert Hetu; Miriam Burt Definition: Digital coupons, also known as electronic or e-coupons, are the electronic form of a paper coupon or voucher. They can encompass several formats, including mobile and social coupons. Position and Adoption Speed Justification: Digital coupons are now widely deployed by retailers and provide an important link to existing traditional coupon users. For example, retailers have used coupons delivered via email for many years. In the past 24 months, "social" coupons digital coupons delivered through community websites and mobile coupons have also taken off to some degree. A 3Q12 Gartner consumer survey confirms the trend toward the convergence of social and mobile activities while browsing or purchasing products. For example, "accessing their primary social networking websites" appears in the top five shopping activities that consumers
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conducted on their mobile phones in the 12 months prior to the survey period. Further, the survey shows that 71% of consumers visited a retailer's Facebook page seeking coupons or special offers. However, in the past 12 months, vendor hype and retailer interest have definitely been focused on the use of mobile coupons to target customers with personalized offers. We expect this hype to continue for at least the next 12 months. Digital coupons provide a dynamic and traceable link to promotions. Moreover, when combined with real-time offer engine technology, these types of coupons could deliver timely offers to welltargeted customers and, thus, increase the likelihood of redemption. However, retailers are still maturing in the distribution and redemption of the newer forms of digital coupons, such as mobile coupons. A key challenge is execution of these types of coupons in customer cross-channel shopping processes. Moreover, in general, customers still favor paper coupons over digital forms. For these reasons, we expect this technology, which combines various forms of digital coupons, to reach the Plateau of Productivity nearer to five years from now, rather than in the next 24 months. User Advice: Establish a well-developed promotion plan to coordinate coupons across channels. A digital coupon can be part of a single-party process, where a retailer issues a coupon via its campaign management system for redemption in its stores, or it can be a multiparty process, such as digitized brand manufacturer coupons that are distributed in a variety of ways, such as redeemed in stores or processed by clearinghouses. Given the growth and use of mobiles for research, customers should be incentivized to use mobile coupons. Good execution of highly personalized promotions is essential to help build customer trust. One way this can be done is through the use of a real-time offer engine with integration to loyalty programs that help the retailer to recognize and reward customers across all channels. It is critical, therefore, that once an offer is "pushed" to a customer, a retailer is able to execute on that offer to the customer's convenience. Retailers should, therefore, take into consideration the impact that digital coupons will have on the operational execution of stock management, in particular in cross-channel processes such as buy online and pick up in store. It will be especially important in the store, where cross-channel processes are largely fulfilled, to ensure stock availability to satisfy customer demand raised through the redemption of coupons. Business Impact: Digital coupons should be viewed in the light of a 3Q12 retailer survey, in which Tier 1 retailers estimated that their mobile and social channels respectively contributed to approximately 6% and 3% of store sales. The benefits of digital coupons for retailers, other than cost savings derived from not having to print, distribute and track paper offers, center on increasing the frequency of visits to the store and increasing the overall customer transaction value. Sales, margins and customer loyalty are all targeted to increase as a result. Through personalization and recognition of the customer, these types of coupons can contribute to building customer loyalty and increasing the likelihood of repeat transactions.
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Benefit Rating: Moderate Market Penetration: 5% to 20% of target audience Maturity: Adolescent Sample Vendors: Coupons.com; Facebook; Groupon; LivingSocial; Mobilize Systems; Zavers Recommended Reading: "Survey Analysis: Tier 1 Retailers Must Capitalize on Consumer Use of Mobile as Key Gateway in Cross-Channel Shopping" "CRM Vendor Landscape: Multichannel Customer Analytics Is a Critical CRM Capability" "Survey Analysis: Multichannel Retailing Drives Revenue to Stores From E-Commerce, Mobile and Social Shopping" "Price and Availability Drive Retail Consumers' Choice of Purchase Channel"
Social Analytics
Analysis By: Carol Rozwell Definition: Social analytics is the process of collecting, measuring, analyzing and interpreting the results of interactions and associations among people, topics and ideas. These interactions can occur in virtual social environments used in the workplace, in internally- or externally-facing communities, or on the social Web. Social analytics is an umbrella term that includes a number of specialized analysis techniques, such as social filtering, social network analysis, social channel analysis, sentiment analysis and social media analytics. Position and Adoption Speed Justification: The desire to find meaning in the myriad of sources of social information available on the social Web, as well as inside the workplace, is spurring interest in social analytics. There are huge volumes of data that appear in a variety of forms and this contributes to the complexity of the analysis. Veteran social software vendors have added tools for social analytics to their collaboration applications that measure adoption and growth to provide an understanding of community dynamics. Analytics vendors are adding tools for social analytics to their applications that provide an understanding of online community and popular social media dynamics. The addition of social data makes individual behaviors, content and interactions visible. Although social analytics is by no means a mature technology, there are well-identified use cases that explain its value. User Advice: Organizations should ensure that their initiatives are positioned to take advantage of social analytics to monitor, discover and predict. Knowing what questions to ask and then having a plan about what to do with the information uncovered are critical components of getting value from social analytics. Some enterprises will be content to simply monitor the conversations and interactions going on around them. Enterprises with social software platforms that provide social analysis and reporting can use this information to assess community engagement. They can also
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easily monitor what is being said about the company, its products and the brand using simple search tools or more sophisticated sentiment analysis applications. The results of social analytics (for example, discovered patterns and connections) can be made available often in real time to the participants of the environment from which the data was collected to help them navigate, filter and find relevant information or people. Other enterprises will mine the social analytics data, actively looking to discover new insights using a wide range of business intelligence applications. At this time, the use of social analytics information for predictive purposes is a largely untapped source of value. However, marketing and product development teams express great interest in this capability. In many organizations, social analytics applied to external activity (for example, sentiment analysis across the Web) will be sourced by marketing professionals and others (such as the legal department, product development and customer support). In those cases, the IT department needs to play a leadership role in orchestrating a coordinated set of activities across departments to, for example, minimize duplication of effort, ensure coordination between efforts and standardize taxonomies. Business Impact: Social analytics is useful for organizations that want to predict trends based on the collective intelligence laid open by the Internet. For example, a biopharma researcher could examine medical research databases for the most important researchers, first filtering for the search terms and then generating the social network of the researchers publishing in the biopharma's field of study. Similarly, social analytics could be used by marketers who want to measure the impact of their advertising campaigns or uncover a new target market for their products. They could look for behaviors among current customers or among prospects that could enable them to spot trends (deterioration in customer satisfaction or loyalty) or behaviors (demonstrated interest in specific topics or ideas). Benefit Rating: High Market Penetration: 20% to 50% of target audience Maturity: Early mainstream Sample Vendors: Attensity; BuzzLogic; IBM; News Patterns; salesforce.com; SAS; Trampoline Systems; Visible Recommended Reading: "Cool Vendors in Analytics, 2013" "Cool Vendors in Content and Social Analytics, 2013" "Advanced Analytics Enables Real-Time Business Optimization"
Social Gaming Ad Networks

Analysis By: Andrew Frank
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Definition: Social gaming ad networks are networks offering advertising in social games with which players are encouraged to engage in exchange for virtual goods or game credits. The advertising often contains a video element, along with social and interactive elements. The concept of exchanging attention to ads for some sort of immediate value offer is referred to as "incentivized viewing." Position and Adoption Speed Justification: Social gaming experienced a dramatic downturn in the past year, as Zynga and EA reported precipitous declines in social gaming revenue and active users, and Facebook expressed open disappointment in the category's performance. On the mobile side, both Millennial Media and Velti pointed to incentivized ads (typical of gaming apps) as reasons for missing targets. This propelled social gaming ad networks quickly past the Peak of Inflated Expectations into a steep decline in hype. Category pioneers, such as SocialVibe and Jun Group, distanced themselves from the category label, repositioning as "engagement ads" and "opt-in video ads," respectively. Although audiences have declined, there's still reason to believe that social gaming ad networks can recover, as they continue to engage audiences and provide opportunities for brands to reach otherwise elusive consumers in social contexts. The gaming industry is notoriously cyclical and is likely to recover as new hits are produced and discovered. The decline in social gaming has not been reflected in an overall decline in social media use, suggesting the audience is still there, just otherwise engaged. User Advice:
Brand advertisers and media buyers may find that the challenges faced by large game development houses hide opportunities for breakout sponsorship deals for promising new titles. Publishers and content providers still need to consider how they can participate in the ecosystem of incentivized views by incorporating elements of the model into their own social and paywall strategies. Social games also continue to provide an important testing ground to assess the optimal balance between direct and advertising-based compensation for digital content experiences. Privacy advocates and regulators need to address the issue of participation by minors head-on. Ad networks and exchanges need to work with developers and publishers to augment the supply of premium social gaming ad opportunities and look beyond the diminished audience size.
Business Impact: Social gaming ad networks have the potential to open an important new branding channel, and in doing so, disrupt a number of media businesses competing for brand revenue. Television is chief among these. To date, television has largely weathered the ill effects that online advertising has had on newspaper ads (especially classifieds) and consumer directories, largely on the basis of its claims to superior emotional branding capabilities and the safety of a controlled environment. Benefit Rating: Moderate
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Market Penetration: 1% to 5% of target audience Maturity: Emerging Sample Vendors: Google; Jun Group; KlickNation; SocialVibe; WeeWorld; Yahoo; Zynga Recommended Reading: "Advertising Finds a Home in Social Games" "Market Trends: Worldwide, Social Gaming, 2011"
Augmented Reality
Analysis By: Tuong Huy Nguyen; CK Lu Definition: Augmented reality (AR) is the real-time use of information in the form of text, graphics, audio and other virtual enhancements integrated with real-world objects. It is this "real world" element that differentiates AR from virtual reality. AR aims to enhance users' interaction with the environment, rather than separating them from it. Position and Adoption Speed Justification: The original hype around AR was driven by the interest and proliferation of mobile devices and geolocation services. Recent focus has shifted to vision-based identification AR. This technology supplements location-dependent AR and provides additional use-case scenarios. A growing number of brands, retailers, manufacturers and companies in various verticals have shown interest in, or are using, AR to enhance internal and/or external business processes. Since the hype around AR has died down from previous years, it has allowed more companies to look beyond the initial hype to explore AR's potential to provide business innovation, enhance business processes and provide high value to external clients. AR will play a role in mobile contextual interactions, and will be particularly powerful for:

Discovering things in the vicinity Presenting real-world objects of potential special interest Showing a user where to go or what to do Providing additional information about an object of interest
A number of factors continue to hinder AR adoption:

Gimmicky AR campaigns that add little value and use AR for the sake of the technology itself Rigorous device requirements restrict the information that can be conveyed to the end user Privacy concerns for both location and visual identification-based AR Data costs for always-on connectivity Standardization for browsers data structure
User Advice:
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Communications service providers: Examine whether AR would enhance the user experience of your existing services. Compile a list of AR developers with which you could partner, rather than building your own AR from the ground up. Provide end-to-end professional services for specific vertical markets, including schools, healthcare institutions and real estate agencies, in which AR could offer significant value. A controlled hardware and software stack from database to device will ensure a quality user experience for these groups. Educate consumers about the impact of AR on their bandwidth, to avoid being blamed for users going over their data allowance. Mobile device manufacturers: Recognize that AR provides an innovative interface for your mobile devices. Open discussions with developers about the possibility of preinstalling application clients on your devices and document how developers can access device features. Build up alliances with AR database owners and game developers to provide exclusive AR applications and services for your devices. Secure preloading agreements and examine how you could integrate AR into your UIs or OSs. AR developers: Take a close look at whether your business model is sustainable, and consider working with CSPs or device manufacturers to expand your user base; perhaps by offering white-label versions of your products. Integrate AR with existing tools, such as browsers or maps, to provide an uninterrupted user experience. Build up your own databases to provide exclusive services through AR applications. Extend your AR application as a platform that individual users and third-party providers can use to create their own content. Explore how to apply AR, through different applications and services, to improve the user experience with the aim of predicting what information users need in different contexts. Providers of search engines and other Web services: Get into AR as an extension of your search business. AR is a natural way to display search results in many contexts. Mapping vendors: Add AR to your 3D map visualizations. Early adopters: Examine how AR can bring value and ROI to your organization and your customers by offering branded information overlays. For workers who are mobile (including factory, warehousing, maintenance, emergency response, queue-busting or medical staff), identify how AR could deliver context-specific information at the point of need or decision. Brands, marketers and advertisers: Use AR to bridge your physical and digital marketing assets and drive increased engagement with your user base. For example, use AR in printed ads and catalogs to let consumers visualize things such as furniture or appliances in 3D in their home, or trying on clothes and accessories. Beware of campaigns that use AR just as a technology gimmick.
Business Impact: AR is used to bridge the digital and physical world. This has an impact on both internal- and external-facing solutions. For example, internally, AR can provide value by enhancing training, maintenance and collaboration efforts. Externally, it offers brands, retailers, marketers and the ability to seamlessly combine physical campaigns with their digital assets. CSPs and their brand partners can leverage AR's ability to enhance the user experience within their location-based service (LBS) offerings. This can provide revenue via set charges, recurring
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subscription fees or advertising. Handset vendors can incorporate AR to enhance UIs, and use it as a competitive differentiator in their device portfolio. The growing popularity of AR opens up a market opportunity for application developers, Web services providers and mapping vendors to provide value and content to partners in the value chain, as well as an opportunity for CSPs, handset vendors, brands and advertisers. Benefit Rating: High Market Penetration: 1% to 5% of target audience Maturity: Adolescent Sample Vendors: Catchoom; GeoVector; Google; Layar; Metaio; Mobilizy; Nokia; Qualcomm; Tonchidot; Total Immersion; Zugara Recommended Reading: "Top Recommendations to Prepare for Augmented Reality in 2013"
Multiechelon Inventory Optimization

Analysis By: Tim Payne Definition: Multiechelon inventory optimization (MEIO) helps users optimize their supply chain response strategies across a multiechelon supply chain by helping them determine appropriate inventory strategies. It also increasingly helps users look beyond inventory to include other facets of the supply chain (for example, sourcing, pooling and replenishment strategies) to support the development of segmented supply chain response strategies for customer and channel segmentation. Position and Adoption Speed Justification: Previously known as inventory strategy optimization, MEIO now reflects the more common term for this type of technology. Most MEIO products use optimization-based technologies with some business intelligence and analytics capabilities. Over time, they're adopting event-based and discrete-event simulation, and stochastic algorithms that enable companies to model uncertainty factors. Long-term business what-if evaluations and scenario planning will eventually be commonplace to support any number of strategies and tactical what-if scenarios. However, users will need frameworks to support the allocation of products to specific supply chain response models. MEIO tools will move to the plateau in two to five years. This is mainly driven by the fact that they are required for more mature inventory planning/ optimization processes, and this is one of the more popular processes for companies to develop as they look to improve supply chain (particularly service and inventory) performance. Fewer independent vendors remain in the market, because supply chain planning (SCP) and ERP vendors have developed or acquired the capability to offer MEIO as an add-on to their application suites. There are, however, a small group of specialist vendors aimed at offering MEIO for spare parts. Longer term, it's likely that the operational and tactical inventory optimization capability will be subsumed into the SCP suites to support integrated inventory policy optimization. More specialized modeling tools for example, the ones supporting segmented supply chain design and postponement strategies will likely merge and/or integrate with integrated business planning/
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Stage 4 sales and operations planning tools to support more strategic supply chain analysis and design. User Advice: For complex, distribution-intensive industries (such as consumer products, retail, aerospace and defense, utilities, and telecommunications), use these and classic SCP tools to extract the greatest value from inventory and supply chain assets. User skills and competencies will need careful management to ensure that value can be used. Otherwise, results can be disappointing. Business Impact: MEIO solutions enable enterprises to use supply chain assets people, equipment, inventory, money, suppliers, routes, locations and promises more effectively, while realigning or segmenting their use across multiple customer and channel segments. Benefit Rating: High Market Penetration: 5% to 20% of target audience Maturity: Early mainstream Sample Vendors: Barloworld Supply Chain Software; IBM; JDA Software; LLamasoft; Logility; Oracle; SAP; Terra Technology; ToolsGroup
Trade Promotion Optimization

Analysis By: Dale Hagemeyer Definition: Trade promotion optimization (TPO) technologies apply techniques such as regression analysis or linear programming to trade promotions to simulate promotional outcomes, such as incremental lift, total volume, ROI, and total funds spent on consumer goods marketing and salespeople. There are actually two elements in this technology: simulation and optimization. The former is an interim step to help people with the scenarios, and the latter is more prescriptive. For now, we will include both elements under this entry until they become distinct. Position and Adoption Speed Justification: In 2012 and early 2013, we saw more TPO projects started than completed, which indicates increased momentum in this space. We also saw projects at companies of various sizes. TPO technologies are maturing and capturing the interest of more and more companies with less than $1 billion in annual revenue. As a practical concept, TPO technologies seek to simulate promotional outcomes based on scenarios for pricing, promotional type (such as display, advertising and secondary display), duration, timing, frequency, specific item and product family. They're available as stand-alone as well as embedded solutions. The embedded solutions are helping accelerate adoption because stand-alone solutions require two systems: one for the trade promotion, and one for the simulation. Adoption of these solutions is farther up the Hype Cycle than consultative and custom offerings, because with TPO, it often takes consulting efforts, in addition to a solution, to get the change management and customization just right. We believe that two factors will accelerate TPO adoption: an improved economy, and more companies fully using trade promotion management (TPM)
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solutions, the logical extension of which is TPO. Once deployed and fully utilized, TPO solutions dramatically improve promotions. The issue is that substantial data integration is required just to see what happened in the past, let alone model what will happen in the future. We estimate that 80% of companies simply have not placed their focus on data integration often because it is difficult and costly and, in many cases, because it is part of a future phase of their TPM project. User Advice: Consumer goods companies that have stable, server-based TPM solutions in place; have integrated the requisite datasets for driving predictive models; have multiple years of clean causal data (like POS or syndicated data); and have automated key processes, such as postpromotion evaluation, should consider adding capabilities that would give users more ability to simulate outcomes. Other user organizations should first get a server-based (as opposed to spreadsheet-based) TPM solution in place, and then begin training personnel to think in terms of scenarios, as well as to evaluate real results to be improved and optimized. These user organizations will then be ready to use simulation tools to move to the next step. There is also value in having a select set of power users on TPO, while the balance of users are learning and going through change management because of the significant benefits to be had from optimizing promotions. Also important is a mindset of continuous improvement, whereby management encourages using TPO to improve outcomes over the long run, not as the basis for punishment when a promotion may not live up to its expected outcome. Business Impact: Case studies and recent research point to high business benefits from an approach that focuses on outcomes. In the absence of outcome-focused capabilities, promotion planners tend to execute the same promotions repeatedly, and about 50% of trade promotions do not achieve a positive ROI. Thus, the upside is substantial as the industry shifts from "same old, same old" to "optimized and differentiated." This technology has the potential to change the nature of retailer-manufacturer relationships by being able to drive outcomes as opposed to relying on the same tired promotions year after year. All indications with only about 1% of the addressable market doing TPO show that retailers react very favorably to the insights and business benefits that can be driven by TPO. Benefit Rating: Transformational Market Penetration: 1% to 5% of target audience Maturity: Emerging Sample Vendors: Accenture (CAS); AFS Technologies; Data Ventures; IBM-DemandTec; Mindtree; Nielsen; Oracle; SAP; Sequoya; Tabs Group; Wipro (Promax Applications Group); Xtel Recommended Reading: "Vendor Panorama for Trade Promotion Management in Consumer Goods"
Master Data Management for Consumer Goods

Analysis By: Andrew White; Bill O'Kane
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Definition: Master data management (MDM) is a technology-enabled discipline in which business and IT work together to ensure the uniformity, accuracy, stewardship, semantic consistency and accountability of the enterprise's official shared master data assets. For consumer goods organizations this tends to include customer, product, vendor, item, and hierarchy master data, in support of a wide range of business investments spanning e-commerce, retail collaboration, B2B, supplier/spend leverage, business intelligence (BI) and business process improvement. Position and Adoption Speed Justification: Consumer goods organizations struggle to get value from numerous business application-based strategies, spanning e-commerce, CRM, ERP, product life cycle management, procurement, as well as newer, consumer-facing investments related to big data, social data, demand-driven supply networks and so on. In every case, master data of different types links the major business processes across these systems. The quality and consistency of that master data hampers the ability to get the value desired from using these systems. MDM is one information management discipline that helps align business and IT to govern that data helping assure better business outcomes from those investments. Use MDM techniques and technologies to achieve consistency, accuracy and integrity of information assets in operational environments. Many consumer packaged goods (CPG) firms still focus on drill-down domain requirements using MDM for product data for individual departmental projects, such as in support of the Global Data Synchronization Network, e-commerce, or multichannel integration. Other uses include improving consumer experience via consistency in data across multiple channels, or in creating a single view of customers to support loyalty programs and customer engagement initiatives. Some of these programs link to governance of content (master content management), which really only entered the market as a (hyped) concept two years ago. There is a potential role for tactical MDM technologies in solving semantic inconsistency issues in downstream, BI, analytical and corporate performance management environments. In 2013, MDM vendors despite often being specialists in industry orientation or data domain (that is, customer or product data) are being asked by consumer goods companies to either integrate with other MDM solutions, or act as multidomain MDM solutions to act as single vendors to master any data. Both of these requests are daunting for most vendors. The requirements across industry and data domains can be very different. The buyers are very different and the applications' scope is very different. As a result, these requests remain a big challenge for CPG companies in 2013. Increasingly, many ERP users are also now looking into application-specific information stewardship applications that are designed to manage the information in specific applications. These are not MDM solutions they are just better solutions built to manage data inside business applications. An MDM program would treat such hubs as if they were ERP data hubs only. Such application data hubs do not negate the need for MDM. However, how the MDM hub integrates and governs the data in remote hubs is certainly a concern for many CPG companies today. User Advice: Organizations must ensure that these activities mesh with their MDM initiatives in the operational environment. They must create cross-departmental collaboration in adopting the discipline to realize and sustain the benefits. All MDM initiatives must be aligned with the objectives of the organization's enterprise information management (EIM) program, which could span master data, content, analytical data, social data and so on. When addressing MDM issues by subject or
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domain (such as customer or product), companies should leverage expertise to expand into other domains. MDM efforts can originate in any function but, for maximum value, initiatives must be consolidated into a comprehensive EIM program. MDM is a discipline, so don't focus only on technology. The keys to successful MDM in a retail organization are:

Line of sight to a business case Business leadership Governance and stewardship of master data established in a line of business Metrics and analytics to guide progress Viewing such initiatives as programs that are ongoing, not projects that stop
Business Impact: CPG firms spread master data across many systems. It is fragmented and often inconsistent. This makes it difficult for organizations to streamline business processes and operations efficiently and develop agile new business processes across business units, markets and channels. This also affects customers who often will not perceive a single view or consistent experience with a given supplier across all channels. With one view of master data, CPG organizations can achieve benefits in such areas as:

Upselling, cross-selling and leveraging CRM and other customer-facing processes Operational benefits from merger and acquisition activities Increased efficiencies on the buy side with deep insights into spending data and vendor analyses More effective data compliance More competitive new product introduction processes Reduced time to market Improved basis for collaboration and joint business planning with retail partners Increased integration across multicommerce processes for improved customer service, reduced out-of-stock instances and increased use of inventory Increased productivity of human capital Greater visibility of the status and performance of the value chain and master data moving through it
As consumer goods organizations adopt MDM, their consumers will also see the following benefits or impacts:

More consistency in marketing messages from their partners/suppliers Improved and unified brand management and execution
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More reliable service including more accurate customer/social data through to available-topromise inventory
Benefit Rating: High Market Penetration: 1% to 5% of target audience Maturity: Adolescent Sample Vendors: hybris; Heiler Software; IBM; Oracle; Riversand; SAP; Stibo Systems; Tibco Software Recommended Reading: "Research Library for the Seven Building Blocks of MDM" "Should Organizations Using ERP 'Do' Master Data Management?" "Mastering Master Data Management" "MDM Products Remain Immature in Managing Multiple Master Data Domains"
Enterprise Manufacturing Intelligence

Analysis By: Simon F Jacobson Definition: Enterprise manufacturing intelligence (EMI) depicts the performance of manufacturing operations by synthesizing and analyzing information from highly granular, manufacturing-related data made visible and understandable through dashboards and portals. Therefore, it is useful in providing decision support to various business and operational roles. Position and Adoption Speed Justification: Organizations seeking to leverage manufacturing's capabilities to make better supply chain decisions continue to struggle with visibility into their operations. This prevents them from computing composite metrics from key performance indicators (KPIs) aggregated from multiple plant sources, and doesn't allow the business to understand manufacturing's true capabilities, costs and constraints. Client activity and inquiry on EMI continues to increase, and clients have a plethora of options from which to choose: point solutions, manufacturing execution system (MES) vendor add-on modules, and frameworks provided by ERP and service firms. Additionally, more manufacturing segments are starting to embrace EMI. As adoption rates grow, it will move beyond the early mainstream of maturity. The hazy functional scopes of most EMI offerings are pushing it further into the trough. EMI applications and frameworks should encapsulate the following capabilities: Aggregate Aggregate information from a variety of real-time and diverse back-end data sources, including automation, historians, MES operational databases, laboratory information management systems (LIMSs) and relational database systems.
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Contextualize Create and maintain persistent functional/operational relationships between data elements from disparate sources. It may be useful, for example, to maintain relationships (context) between certain named process variables and ranges of time series data. Analyze Transform data into real-time performance intelligence through the application of business rules (that is, calculating the range of KPIs using raw process performance and costbased information from ERP and other business-level systems). Visualize Provide intuitive, graphical representation of intelligence that supports context-based navigation of information based on persistent interrelationships, enabling drill-down from multiplant representations to individual facilities and systems. Propagate Automatically transfer relevant operational performance information to the appropriate business-level systems (such as enterprise asset management [EAM], ERP, supply chain management [SCM] or product life cycle management [PLM]). The majority of EMI approaches do not provide much more than analysis and visualization. This functional inadequacy of many EMI providers means that any associated process changes are done separately, and local quick wins at the local level tend to take center stage, versus using the intelligence to drive more widespread improvement of product supply capabilities. The following will accelerate the EMI market's ascension toward the plateau: Some EMI providers continuing to add deeper functionality through products designed to do more than provide descriptive analytics and report on manufacturing performance. These secondgeneration or add-on products will be participating in the operations intelligence (OI) market, which is gaining momentum at this stage. Do not expect EMI to become obsolete or fully overtaken by OI at this stage. The two technologies are complimentary of one another, and it is not uncommon that a vendor will have offerings in both camps. Overcoming multisite scalability hurdles. The majority of EMI approaches start with simple overall equipment effectiveness (OEE) dashboards to understand performance on a local level (such as line or asset), with the intention of scaling into multiple line or multiple site deployments. These initial beachheads often deliver quick wins and rapid returns on initial cash outlays, validating that EMI is a low-risk, high-reward investment. However, it also elongates the deployment cycle for multiple sites, which is why the time to plateau has been elongated. User Advice: EMI provides the following kinds of decision support:

Machine-state data (up, down, stopped and idle) translated into OEE Information on energy efficiency and consumption Process variable history translated into dollars-per-unit volume production Quality-reject data translated into dollars per finished goods scrapped (or the cost of poor quality [COPQ])
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Organizations without a clear understanding of what it is they need to measure will face longer time to value from their investments. Whether or not an application can satisfy your performance-monitoring requirements depends largely on how the application is architected. Conventional analytics applications operate on datasets that have been staged, but this introduces latency into the process, since data is captured, transformed and then stored into the analysis set. There are also applications that can perform analytics "on the fly" as data is extracted from shop-floor sources, but this places a heavy burden on the network, thus limiting the applicability of these tools for high-volume, high-refresh applications. The kind of EMI application to use should be dictated by how "real time" your organization's data and information requirements are. In some cases, using the add-on EMI module from an incumbent provider might be more sensible than layering a third-party application. Business Impact: Manufacturers seeking competitive advantage understand that manufacturing operations must no longer constrain supply network responsiveness. They are linking supply and demand, while decreasing manufacturing costs and increasing agility. To strike this balance, KPIs are needed to provide visibility into asset availability and capability, work in process, and inventory movements. EMI helps overcome the visibility hurdle that stands in the way of this realization. Benefit Rating: High Market Penetration: 20% to 50% of target audience Maturity: Early mainstream Sample Vendors: Apriso; Epicor; GE Intelligent Platforms; InfinityQS; Invensys; IQity; Oracle; Parsec; Rockwell Automation; SAP; Shoplogix; Siemens Recommended Reading: "Debunking the Hype of OEE" "The Manufacturing Performance Dilemma, Part 1: Overcoming Visibility Hurdles With Enterprise Manufacturing Intelligence" "The Nexus of Forces Is Ready to Advance Manufacturing 2.0"
Climbing the Slope

2D Bar Code Marketing
Analysis By: Sandy Shen Definition: Creating marketing materials using 2D bar codes enables people to access information such as websites and product information, or download content such as coupons and business cards, onto mobile phones. Companies can print bar codes on advertisements, posters, brochures and product packages. Users can then scan these bar codes with a camera-equipped phone to access the information.
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Position and Adoption Speed Justification: Brand-name companies can use 2D bar codes to drive customer engagement by encouraging interaction with the printed content. They can also use them to track usage in order to gauge the effectiveness of advertising campaigns. We have seen 2D bar codes being used by an increasing number of companies across various industries. For example, newspapers and magazines use 2D bar codes in print advertising to generate muchneeded revenue. Broadcasters and advertisers include bar codes in TV shows and commercials to enable interaction and access to more information. Local businesses such as retailers use bar codes on posters and flyers to increase footfall and extend loyalty programs with in-store promotions. Online retailers use bar codes to direct people to their online stores. 2D bar code usage is on the rise over the past year. A comScore study in September 2012 indicated that the usage of quick response (QR) codes among smartphone users in the major five countries in Western Europe increased by 96% in one year. A Pitney Bowes study in January 2013 indicated that the U.S. is even further ahead of Western Europe in terms of bar code usage, with 39% of those aged between 18 and 24 having scanned a QR code, compared to 27% in Germany, the country with the highest reported usage in Western Europe. Such fast adoption of 2D bar codes is due to increasing consumer awareness, the prevalence of bar codes on printed materials, and the inclusion of bar code readers in smartphones and mobile apps. Major online retailers, including eBay and Taobao, have also built bar code scanning directly into their shopping apps. Advertisers increasingly view promotional bar codes as an important marketing technology with which to reach users. A Gartner survey conducted in August 2011 found that over half (53%) of the advertisers and agencies in the U.S. and U.K. that responded already included QR codes in their marketing, and an additional 30% were "somewhat likely" or "very likely" to include them in the next 24 months. This makes bar codes the No. 3 emerging technology in a long list that includes Facebook fan pages (No. 1) and dual-screen TV app platforms (No. 17). Bar codes also beat mobile search advertisements, branded apps for media tablets, viral videos and promoted tweets on Twitter in the same list. 2D bar codes are a simple technology to implement, compared with Near Field Communications (NFC) as they involve fewer ecosystem players. This enables shorter implementation times and lower costs for marketers. However, 2D bar codes face competition from SMS and, to a lesser extent, Bluetooth in the short term. They will also face a challenge from NFC when this technology matures and becomes widely available. User Advice:
Mobile platform providers should include bar code scanning as a standard capability in their operating systems to provide a consistent experience for users. Brand-name companies should consider 2D bar code marketing for campaigns and promotions, but be fully aware of the different coding schemes and the requirement of smartphones. Print publishers should encourage advertisers to include 2D bar codes in advertisements to improve the fill rate and reduce the pressure to discount.
Business Impact:
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Brand-name companies can cut paper, printing and mailing costs by employing bar code marketing. They can also dynamically change the content without having to replace the bar code in the field. They can also monitor the usage to measure campaign effectiveness. Print media companies can position themselves as more effective channels for advertisers by enabling brand-name companies to track the effectiveness of advertising campaigns, if they have reporting mechanisms in place.
Benefit Rating: Moderate Market Penetration: 5% to 20% of target audience Maturity: Adolescent Sample Vendors: 3GVision; Ecrio; Mobile Tag; Mobiqa; NeoMedia Technologies; Neustar; Scanbuy Recommended Reading: "Three Techs Make it Easy to Use Internet of Things in Marketing" "Survey Analysis: Big Advertisers Overcome Digital Aversions"
Quality Process Management Applications

Analysis By: Simon F Jacobson Definition: Quality process management applications are a subset of quality management systems (QMSs) that digitally represent standard operating procedures that govern, support and enforce conformity to International Organization for Standardization (ISO) standards, or other industryspecific or customer-mandated quality standards. Position and Adoption Speed Justification: For most organizations, the various methods and procedures for quality management are enforced through fragmented business processes and IT architectures populated with point applications for specific functions, such as corrective and preventive action (CAPA), failure modes and effect analysis (FMEA), or audit management. These loosely integrated data models and workflows only increase data latency, cost and risk, and lead to a lack of accountability. Buyers continue to evaluate new systems and approaches. What they find is that a space once dominated by point application purveyors is now heavy with options from not just manufacturingcentric providers from the manufacturing execution system (MES) and product life cycle management (PLM) domains, but also from ERP and governance, risk and compliance (GRC) providers. The choice of using a quality management system (QMS) suite or the quality capabilities provided by broader applications will depend on individual circumstances. In turn, the providers of quality process management applications are delivering intuitive processmodeling environments to allow companies to centrally develop, deploy and manage qualityoriented processes, such as complaints and audits. While this has, on one hand, created a capability for customers to internally manage their systems and deployments themselves (and establish commonality across the business), on the other, this freedom, enabled by the provider, is
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detrimental: In absentia of a disciplined approach to QMSs, customers can find themselves creating an overabundance of process and workflows that end up being just as fragmented as their current processes (or in some cases, overlapping with parallel processes, such as EH&S, for example). Until tighter architectural discipline can be enacted on the users, with guidance from their providers on how to deploy and scale the applications, the time to plateau has been extended for this application class. User Advice: Enterprises in all industries should deploy quality functionality, especially those in consumer-facing industries, and particularly the ones that deliver products targeted for use by children or for consumption, such as food or pharmaceuticals. However, too many companies focus quality efforts on their products, and treat business process attributes in the value chain separately. Endless kaizen events and lean Six Sigma efforts at the plant level to drive local quality gains are a perfect example of this. But value chain quality requires companies to define and manage all products and business process attributes that impact customer satisfaction. Business processes must link the capabilities that coordinate supply and demand, as well as product design, with the value chain. This creates a feedback loop between what the customer wants and what the end result is, while balancing costs and productivity at the same time. It's a transformation that starts with tearing down the thick walls that have traditionally segregated quality, and moving these functions and resources into supply chain lines of business. Create an approach that encompasses multiple tiers of suppliers, contract manufacturers and customers to enforce procedural and product compliance. Focus on complete approaches that expand beyond niche functionality, and provide integrated workflow support to ensure that not just product-specific standards are met, but other regulatory compliance standards are, too. Business Impact: Organizations often claim they orchestrate quality processes, but it's often within specific functions versus addressing the full value stream. Outside finance, there is no one business discipline that touches and impacts more organizational functions than quality. Corporate operations continue to be exposed by gaps in their quality processes and supporting data, with the financial performance implications and risks only increasing. Businesses that have multinational and offshore manufacturing centers are particularly vulnerable to negative brand impact from quality issues, such as lead paint in children's toys, poor quality in automobile tires, or contaminated food or medical products. A stringent quality compliance program supported by robust tools can prevent unsafe, dangerous or shoddy products from reaching the market. Benefit Rating: Moderate Market Penetration: 20% to 50% of target audience Maturity: Early mainstream Sample Vendors: EtQ; Intelex Technologies; MasterControl; Oracle; Pilgrim Software; PTC; SAP; Siemens; Sparta Systems Recommended Reading: "Best Practices for Taking Quality Beyond Manufacturing and Into a Business Capability Supporting the Value Chain" "Cost of Poor Quality Is a Component of Supply Chain, Not Just Manufacturing"
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"EQM Hubs Unite Quality Management IT Systems Across the Value Chain"
Trade Promotion Management (C&SI)

Analysis By: Michael Dominy Definition: Trade promotion management (TPM) consulting and system integration (C&SI) services seek to improve the effectiveness of trade promotions. These services address trade promotion processes that are embedded in packaged trade promotion solutions (such as assortment planning, pricing, promotional tactics and simulation) and processes that have yet to be addressed by generally available solutions (such as optimization and predictive modeling). Position and Adoption Speed Justification: TPM consulting services are offered by a handful of strategy consultants, as well as some consulting and system integration consultancies. One reason why too few consultancies participate in this space is that many TPM vendors are relatively small and don't typically work with large service providers. By comparison, two of the largest TPM software vendors, Oracle and SAP, have alliances with leading service providers, while CAS, the other major TPM vendor, was acquired by Accenture. More recently, IBM acquired DemandTec and Wipro acquired Promax. The acquisitions by the service providers, especially IBM and Wipro, illustrate the increasing importance of trade promotion, analytic and optimization services. Demand by enterprises for comprehensive TPM services (that is, trade promotion transactional processes, planning, optimization and analytics) remains limited because many of the smaller and midsize enterprises are unable to resource software and service solutions. Consumer packaged goods (CPG) is the most advanced market for solution adoption, with consumer health and consumer electronics showing some interest. Other manufacturers of semidurables and durables show little interest in these types of solutions, primarily due to their infrequent use of trade promotions. Many of the late adopters have not automated the TPM processes from spreadsheets, so there is little appeal in having consultants help them in the process until they see an urgent need for total process improvement, or technology implementation to support or enable process improvements. TPM consulting services moved slightly this year on the Hype Cycle. Here are two reasons for this shift along the curve: the uncertainty related to acquisitions of TPM solutions by service providers has eased, and there has been an expansion of trade-promotion-related services during the last 12 to 18 months. These services include optimization services offered by consulting firms that acquired software vendors and services, such as data cleansing and harmonization services, which are required as consumer goods companies move from TPM to trade promotion optimization (TPO). User Advice: Work with a service provider to evaluate your TPM process and technology options, in light of industry best practices and available solutions. Define your TPM improvement road map in phases with short-term opportunities, such as trade spending and postevent analysis early on, and more sophisticated optimization and scenario planning positioned in later phases. TPM includes deduction and accrual management with trading partners, and should be part of the early phases of your TPM road map. The benefits of streamlining and improving trade-spending effectiveness/efficiency, and driving top-line revenue using TPO tools, are significant, but do not
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underestimate the time and resources necessary to achieve them. In particular, the change management requirements will be considerable. Explore analytic service offerings that are focused on optimizing a specific promotional event or category within the event. Also, ask the service providers about how to leverage shopper behavior and consumer demand data in the TPM process. These analytic and optimization services are available from multiple providers that provide business process outsourcing (BPO) in addition to consulting and integration. Have the service provider demonstrate how using its service would deliver better results than your current approach to trade promotion planning. Consider leveraging BPO providers to help offload reporting and administrative activities from the sales organization, particularly when establishing or expanding into emerging markets. Several very large consumer goods companies are using BPO providers to support trade-related activities in emerging markets, which enables the manufacturer to deploy a different organizational and operating model to support those markets. Beware that most service providers are biased toward their TPM partners. Once you align yourself with one consultant, you are unlikely to be exposed to all the options available in the marketplace. If you are considering a service provider that has acquired a TPM software vendor, ask the provider for a product development road map. Business Impact: TPM consulting, system integration and BPO services can improve revenue streams and margins by ensuring solution adoption, and by establishing more effective and appropriate promotional timing, effectiveness and relevance to buyers at a more granular and measurable level. Buyers of TPM services can drive near-term benefits from process and technology innovation in the market, and enable greater control and oversight, resulting in an increase in trade promotion revenue as a percentage of sales. Industry research and Gartner's experience working with consumer goods companies indicate that at least 50% of trade promotions are not believed to achieve positive ROI. TPM consulting services can help organizations identify and reduce spending on low-value efforts, and integrate TPM technologies to support strategic promotion decisions. In recent months, companies have been increasingly looking at trade promotion initiatives as a way to grow revenue, not just as a more efficient and effective method to spend trade funds. Benefit Rating: High Market Penetration: 20% to 50% of target audience Maturity: Early mainstream Sample Vendors: Accenture; Clarkston Consulting; Deloitte; IBM Business Consulting; Infosys; Wipro Recommended Reading: "SAP Supply Chain Management System Integrator Assessment and Selection Guidance" "Oracle SCM System Integrator Assessment and Selection Guidance"
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"How to Select the Right SCM Service Provider" "What Supply Chain Leaders Need to Know About Business Process Outsourcing for Supply Chain Management" "Seven Key Considerations When Choosing a Trade Promotion Management Solution"
Merchandising and Category Optimization

Analysis By: Don Scheibenreif; Robert Hetu Definition: Merchandise and category optimization covers seven key merchandising process groupings: price, promotion, markdown, assortment and optimization, replenishment, size and pack, and space. Optimization is derived from using business goals, product, location and customer intelligence data to inform the merchandising and planning decision process. Position and Adoption Speed Justification: Consumer goods manufacturers are important contributors to a retailer's merchandise and assortment planning process. Through disciplines like category management, they are able to contribute insights, promotional funding and planning expertise to ensure retailers and manufacturers can achieve their revenue and consumer satisfaction goals. Our retail research finds that traditional planning applications are good at managing and automating planning tasks. Optimization takes this a step further by improving and automating decision making required to support seven optimization areas assortment and allocation, space, replenishment, price, promotion, markdown, and size and pack to adjust assortments by store or cluster, determine buy quantities, optimize space allocation and planograms, and maximize product allocation and availability. Price, promotion and markdown optimization are directly linked to merchandise and category optimization; for apparel and footwear retailers, size and pack optimization is required. Optimization technology can come from individual modules in larger retail suites, best-of-breed vendors or advanced analytics business intelligence vendors. The market has matured to the point where most of the major merchandise planning and category management vendors offer some degree of demand forecasting and optimization as part of their offerings. Early-adopter retailers have already implemented these advanced technologies in one or more of their merchandising processes. Space optimization is gaining popularity with grocers and discounters, while size and pack optimization is popular with apparel retailers. As retailers implement optimization capabilities into more of their merchandising processes, they are seeking an architecture that centralizes forecasting and optimization assets across all areas. For example, a retailer with promotion optimization and replenishment optimization will want a single forecasting capability feeding both applications for a consistent demand forecast. In the area of assortment specifically, interest is being driven by retailers adopting customer-centric merchandising strategies, with aspirational goals of store-specific or store-cluster-specific assortments. The integration of recent acquisitions of vendors by large, global, diversified solutions and consulting firms and several mergers of complimentary solution providers represent opportunities to integrate a broader range of consumer insights and demand-sensing capabilities that will improve the effectiveness of the assortment and space optimization process. However,
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opportunities for integration of dynamic consumer behavior data (for example, social media) and stronger manufacturer retailer collaboration still remain. User Advice: Retailers are actively researching and implementing merchandise optimization applications. Cross-channel shopping behavior, combined with multichannel order management and in-store fulfillment capabilities, is causing an acceleration of interest in this technology. If you are a consumer goods manufacturer assigned to be a category captain for a retailer, it will be important for your technical specialists to be familiar with these technologies, and their application in a retailer's merchandise and promotion planning process. Additionally, you will want to be able to effectively contribute your insights and analysis of shopping behavior and consumer preferences via the category management process. Business Impact: Ultimately, these technologies will help retailers achieve higher sales and margins in their local markets. They facilitate the complex management that micromerchandising requires, enabling the retailer to do more-detailed planning with fewer resources. This technology is required to support customer-centric merchandising. Actively collaborating with retailers in the process can help improve the overall effectiveness of the merchandising and category assortment, and should result in increased sales and customer satisfaction if the plans are executed effectively in-store. Benefit Rating: High Market Penetration: 20% to 50% of target audience Maturity: Early mainstream Sample Vendors: 4R Systems; 7th Online; Galleria; IBM (DemandTec); JDA Software; Nexium Customer Solutions; Oracle; Predictix; Quantum Retail Technology; Revionics; SAP; SAS; Soft Solutions; SymphonyEYC; TXT e-solutions Recommended Reading: "Multichannel Pressures Drive Optimized Merchandising" "Merchandising Optimization for Multichannel Fashion and Short Cycle Clothing Retailers" "Multichannel Pricing: Strategically Consistent, Opportunistically Flexible" "Assortment and Space Optimization Capabilities for Consumer Goods Manufacturing" "The State of Retail Merchandise Optimization for Assortment, Space and Life Cycle Price"
PLM for Apparel, Footwear and Accessories

Analysis By: Janet Suleski Definition: Product life cycle management (PLM) for the retail, apparel and footwear industries, collectively called the fashion industry, is a class of software that enables the design and development of products. Its purpose is to coordinate the design, costing, specification and sourcing workflow to deliver new products in less time. Harnessing supply chain contributions to
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product development activities is a core element of creating an effective coordination and control platform. In addition, it provides visibility throughout the entire process. Position and Adoption Speed Justification: The pace of consolidation within this segment of PLM has decelerated, but targeted acquisitions continue to take place as some larger software vendors seek to close any gaps that still exist in their solution footprints. As the retail, apparel and footwear industries continue to solidify their adoption of standardized platforms and processes, interest is growing in functionality such as costing, analytics, virtual product prototyping, product portfolio management (PPM) and integration to assortment planning. Additionally, interest in the use of mobile technologies and the integration of customer feedback and opinions obtained through social media channels is in the very early stages, but gaining traction. Early adopters have benefited from implementations of PLM, and a growing number of second- and third-generation implementations are currently underway. While PLM adoption in this market is still increasing, research points to more mature deployments and a growing number of companies replacing first-generation, and even second-generation, PLM applications with more advanced capabilities. It will, however, be two to five more years before PLM technology will be considered solidly mainstream in the fashion, apparel, footwear and retail industries. User Advice: The top criteria for adoption of these solutions are typically to capture ideas for innovations from across the value chain, increase visibility throughout the product development pipeline, improve the speed of development of new designs from concept to store shelves, ensure product quality, and reduce costs and cycle times in the product development, sourcing and commercialization processes. Successful PLM implementations in the fashion industry combine an effective platform and best-practice business processes, adapted to meet the specific requirements of the organization. This requires expert advice and assistance throughout the project to ensure that all aspects of change management are accommodated. Getting designers, for example, to adopt and actively use PLM technology is not easy. So, the right combination of understanding of business processes, business culture implications and change management must be found. One key recommendation is to ensure that the software is implemented by people with experience in the fashion and retail businesses and its unique processes, not just in the technology of the PLM platform. Business Impact: Retail, apparel, footwear and accessories companies seek to use PLM software to coordinate the entire product development cycle, from idea to delivered product. Reducing the total cycle time and getting the product to market quicker are often critical objectives of PLM adoption. Increasingly, PLM initiatives are coordinated with other supply chain cycle time efforts, and their performance is closely tracked and measured by roles responsible for total product lead times, from concept to sale. Other key business objectives often include gaining better control of costs, coordinating global teams internally, collaborating more effectively with external trading partners, improving the success rates of new designs, and improving visibility across the entire process and the product development pipeline. Increasingly, users are asking PLM applications to stretch beyond even these boundaries and support the wider set of marketing, sales, packaging and other functions required to see a product through to full commercial launch.
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Benefit Rating: High Market Penetration: 20% to 50% of target audience Maturity: Early mainstream Sample Vendors: Centric Software; Core Solutions; Dassault Systemes; Gerber Technology; Lectra; PTC; TradeStone Software Recommended Reading: "Invest in PLM for Sustained Supply Chain Success in the Apparel Industry" "Five Ways Apparel Companies Can Reduce Lead Times" "PLM and Private-Brand Management Differences Matter When Selecting Applications" "PLM's Role in Becoming Demand-Driven in the Apparel Supply Chain" "Reference Model for PLM in the Retail, Footwear and Apparel"
PLM for Packaged Food, Beverages and Personal Care Products

Analysis By: Janet Suleski Definition: Product life cycle management (PLM) for packaged food, beverages and personal care products is a suite of software applications that supports the process of conceiving and developing formula-based products that require packaging. It supports designing the formulations, packaging, labels and manufacturing processes, while continuously improving the products. The applications support the processes of creating, revising, managing and reusing all of the product data necessary to support the various phases of a product life cycle. Position and Adoption Speed Justification: This category of commercial PLM software began to evolve during the early 1990s. Many of the early software vendors in this space have been acquired, or they are now out of business. Several have been acquired by larger PLM vendors or enterprise software companies, and their capabilities added into the functional footprints of these vendors. An increasing number of manufacturers are investing in this software and getting value. However, the capabilities are not yet mature enough, nor easy enough to deploy, to address the needs of many small manufacturers. The deployments require more investment in technology and in the time and effort needed to move down the PLM learning curve than most small manufacturers are ready to make. It will be more than five years before this changes significantly. User Advice: Functional areas, such as specification management and product portfolio management (PPM), typically deliver the fastest value most reliably, because manufacturers, software vendors and service providers have more experience deploying them than other PLM capabilities. Deployment of formulation and recipe management have also delivered value, but are less mature in adoption. It is best to embrace a multiyear phased deployment approach so that companies can invest in these sequentially. Most early adopters invested in specification management first, because it has an immediate positive effect on existing manufacturing
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operations. Then, they look to link recipe/formulation management to specifications. PPM can be adopted in parallel with these efforts, because it addresses a different user role versus specification and recipe/formula management. Adopters should define and validate desired processes before deploying the software, or defining data schema to be used in specification and recipe/formulation management. Business Impact: The primary business benefit is faster time to market for cost-effective and quality products. This class of software has reduced the cost of executing approval processes to change formulations and packaging by more than 40%. Some manufacturers have cut the time to execute change processes by 70% or more. The tools make regulatory compliance more efficient by automating electronic signature for mandatory regulations, such as 21 CFR Part 11. Additionally, they are becoming increasingly important to address environmental, health and safety (EH&S) legislation, such as the European Union's Regulation for Registration, Evaluation, Authorization and Restriction of Chemicals (REACH), which limits the use of toxic chemicals in formulations and manufacturing processes. PLM applications keep audit trails of past actions and changes made to the formulation throughout the development life cycle, which assists with historical analysis and tracking actions in the case of regulatory or compliance issues. And, as PLM activities play an increasingly influential role in sales and operations planning (S&OP) and new product commercialization strategies, PLM technology becomes part of the platform used to expand collaborative activities with suppliers and retail customers, in particular. PLM applications become the system of record for the single version of the truth about a product as it moves through iterative collaboration cycles, both with external trading partners and with internal business partners from the supply chain, S&OP and commercial teams. Benefit Rating: High Market Penetration: 5% to 20% of target audience Maturity: Adolescent Sample Vendors: Accelrys; Dassault Systemes; Infor; Oracle; SAP; Selerant; Siemens; Sopheon; Trace One Recommended Reading: "A Guide to PLM Providers for Formulated Packaged Goods Industries" "PLM Drivers and Software Needs in Formulated Packaged Goods Industries" "Cool Vendors in Product Design and Life Cycle Management, 2013" "Align PLM Improvements Carefully for Success in Process and Packaged Goods Industries" "Food, Beverage and Personal Goods Firms Accelerate Business Performance Through PLM" "PLM for Process Manufacturers Provides a Competitive Edge in Global Markets"
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Stages 2 and 3 Sales and Operations Planning

Analysis By: Tim Payne Definition: Gartner recognizes five maturity stages of sales and operations planning (S&OP). At advanced stages (Stages 4 and 5), it facilitates value trade-offs across the supply chain. Technology is used at each stage of S&OP, but it changes as the process matures. For Stages 3 and below, technology needs to support the aggregation and harmonization of operational plans. However, the most prevalent technology for Stage 3 and below S&OP is still the spreadsheet, albeit supported by ERP and supply chain planning (SCP) systems. Position and Adoption Speed Justification: The concept of S&OP to harmonize business strategies and operational plans has been around for many years, and it's particularly well-known in manufacturing organizations. However, at lower levels of maturity, the strategic and financial dimension is mostly absent, only really being present in processes at Stages 4 and above. Stage 3 S&OP is mainly focused on operational reconciliation, typically using SCP as its basis. On that basis, we haven't changed the position of this Hype Cycle entry since last year. Successful adoption of S&OP has been limited by organizational issues, and by the inability of technology to support a truly cross-functional process with integrated what-if and execution capabilities. SCP and ERP vendors are focusing on providing basic S&OP capabilities for Stage 3 and below, as well as some pure-play solutions. Specific S&OP technology, as opposed to using existing SCP applications, is maturing, with some vendors adding more capability to bring a stronger financial analysis dimension to the process. This is often good technology to support a late Stage 3 S&OP process, but is often more suited to supporting a Stage 4 S&OP process when financial impact analysis and stronger what-if support are more valued. Interest in S&OP from end users is still very strong. Many are re-examining their processes and trying to determine how to make them more effective. Interest is driven by the need for better visibility and scenario management in the supply chain to help evaluate different potential outcomes and effects arising from increased uncertainty on the supply and demand sides. User Advice: To support your early-stage S&OP process initiatives, evaluate the different tools in the market. Pay attention to how they support the business processes of S&OP and, specifically, the different stages of S&OP maturity not just the data aggregation and representation requirements. Understand that the demand planning, sales pipeline planning, or product and distribution planning solutions that have been extended with S&OP screens and reports will help with Stages 1, 2 and 3 S&OP, but won't necessarily support all the process requirements and financial impact analyses of Stages 4 and 5 S&OP. Vendors for Stage 3 S&OP include SCP applications, ERP suites, business intelligence suites and best-of-breed applications. Business Impact: Stage 3 S&OP applications help companies make better use of resources by balancing supply with demand. They also deliver improved collaboration throughout the organization, what-if and scenario management capabilities to help in the evaluation of alternative operational options, and the reconciliation of operational plans to financial plans and budgets. Benefit Rating: Moderate
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Market Penetration: 20% to 50% of target audience Maturity: Early mainstream Sample Vendors: Demand Management; IBM (Cognos); JDA Software; John Galt Solutions; Kinaxis; Logility; Oracle; SAP; Steelwedge
MES Applications
Analysis By: Simon F Jacobson Definition: Manufacturing execution system (MES) applications are a specialist class of productionoriented software that manages, monitors and synchronizes the execution of real-time, physical processes involved in transforming raw materials into intermediate and/or finished goods. They coordinate this execution of work orders with production scheduling and enterprise-level systems like ERP and PLM. They also provide feedback on process performance, and support traceability, genealogy and integration with process history, where required. Position and Adoption Speed Justification: MES applications have taken a step back on the Hype Cycle, with an extended period to plateau for the following reasons: The $1.5 billion MES market is very fragmented by industry focus. Vendors will often focus on a specific industry or unique grouping of industries (vendors that provide functionality for chemical mixing and blending are often considered in active pharmaceutical ingredient [API] manufacture, for instance). As a whole, the market is moving from point MES applications, expanding the functional scopes to include capabilities for quality and test management, and operations intelligence (OI). In doing so, competition from encroaching forces, such as ERP, and product life cycle management (PLM) providers looking to claim their portions of manufacturing operations, intensifies and, in some cases, creates an opportunity for market consolidation. In other cases, point solutions that passively collect, report on or distribute information, such as pure work instruction systems, offline plant scheduling packages and enterprise manufacturing intelligence (EMI) toolkits claiming to offer MESlike functionality, only serve to obfuscate the definition and scope of MES, which confuses buyers. While the market size pales in comparison to other enterprise software segments like ERP or supply chain management (SCM), MES applications are relatively mature and remain on top of the list of prioritized manufacturing investments for companies seeking control and consistency across their manufacturing operations. Not only does MES provide the digital enforcement of processes, methods and procedures in manufacturing, but it also provides the necessary genealogy traceability information required for compliance purposes, making it a strategic nucleus of broader manufacturing architectures. Companies re-examining their manufacturing architectures, however, must encounter the manifold currently deployed, homegrown and monolithic MES applications. Site-level reluctance to "let go," fuzzy understandings of cost, ROI and poor business case justifications are obstacles to scale and success. They contribute toward and create roadblocks in the form of competition with other IT projects and resourcing issues. User Advice: For companies in the process of selecting a new MES, choosing a product that's right for your environment is ultimately determined by two things:
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The functional capabilities a product has to offer The degree of domain specialization required
A note on the latter: There are vendors that play predominantly in the aerospace and defense (A&D) segment, offering capabilities that have been designed to manage reporting (such as job costing) and regulatory requirements that are specific to the defense sector. However, these products may be perfectly capable of performing in a general discrete manufacturing environment. For this reason, Gartner advises clients to not rule out a vendor that meets their requirements solely on the basis of installed base. Although single-vendor MES solutions can still be more cost-effective to implement within a site, several manufacturers, as part of efforts to standardize manufacturing best practices, continue to pursue multiple site deployments. The successful ones do not eye deployments of MES in isolation. They seek to integrate the MES with other business processes at the plant, across the manufacturing network and throughout the supply chain. This means companies looking at new MES investments must identify customer-facing opportunities, such as optimizing lead times and decreasing new product introduction cycles, not just site-specific goals, like decreasing legacy IT total cost of ownership (TCO) or "going paperless." Thus, with respect to implementation and long-term success, consider the following:
Don't stop at local cost reductions and efficiency gains. Leverage the value of product and process information that MESs provide to identify process risk, decrease cycle times and increase cross-functional collaboration across the manufacturing network. Use communication and education, not spreadsheets, to sell leadership on the larger benefits of an MES as a platform that supports standard manufacturing processes, as well as enhances compliance, flexibility and time to market. Improved flexibility and responsiveness are difficult to quantify, but are often desirable to executives who control the budget and funding. Include both strategic and tangible benefits in your business case. Partner with your vendor. MES vendors have decades of combined experience and bring sizeable domain knowledge to broaden the perspective on potential benefits.
Companies that challenge the maturity of MES applications are the same organizations that have mismanaged their MES deployments. The success of these projects requires elimination of project governance disconnections (such as the dearth of C-level executive sponsorship and IT prioritization for the complete project life cycle), as well as clear understandings of the integration requirements and business process re-engineering efforts. When grossly underbudgeted, inappropriately performance-managed and understaffed, these projects don't deliver business value. Partner with your vendor or a specific service provider during the implementation to learn how the MES integrates with critical business processes. Internalizing this knowledge will assuage any pains of long-term support postimplementation and lessen the deployment costs over time. Failure to do so will hinder any benefits and business value realization efforts.
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Business Impact: The benefits of MES can primarily be found on factory and plant floors through cost reductions, boosted quality through error-proofing and the elimination of manual work processes. However, if scoped and implemented appropriately to integrate with other processes for product supply, it can support the growth goals of the business while removing costs and complexity, driving process optimization, and directly impacting the bottom line. Benefit Rating: Moderate Market Penetration: 20% to 50% of target audience Maturity: Mature mainstream Sample Vendors: Apriso; AspenTech; Camstar; CellFusion; Eyelit; GE Intelligent Platforms; Honeywell Process Solutions; iBaset; iTAC Software; Invensys Operations Management; Oracle; Performix; Rockwell Automation; SAP; Siemens; Werum Software & Systems Recommended Reading: "Vendor Guide for Manufacturing Execution Systems, 2012" "Governance, Not Technology, Drives Measurable Business Value From MES" "Toolkit: Choosing the Right MES Functionality"
PLM for Durable Consumer Goods

Analysis By: Marc Halpern Definition: Product life cycle management (PLM) for durable consumer goods is a suite of software applications that support the process of conceiving and designing consumer products that include mechanical parts, electronics and, increasingly, embedded software. Additionally, this category of software includes capabilities to design the manufacturing processes that best support the product design. Position and Adoption Speed Justification: This class of software has been evolving since the mid-1980s. Adoption has moved beyond the large manufacturers to many progressive small and midsize manufacturers. Smaller PLM vendors that had key strengths in these capabilities either have grown to become larger vendors or have been acquired. Support for key capabilities, such as engineering change processes across a supply chain, has become increasingly standardized. Gartner sees adoption in the mainstream market accelerating. User Advice: Manufacturers adopting this class of software should prioritize support not just for mechanical design, but also for electronics design and software (embedded and not embedded alike) as key vendor selection criteria. This means that the software should support the mechanical and electronic design software formats that they and their suppliers use. Many of the leading vendors now provide templates with predefined workflow and data schema, particularly for engineering change processes. Users should ensure that these templates support their preferred workflow, but also have the flexibility to adapt the workflow to unique aspects of their business
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processes. Early adopters prioritize product portfolio management capabilities, as well as product data management support. Although it is more efficient to select a single vendor that provides all the PLM support, Gartner finds that many durable consumer goods manufacturers prefer best-of-breed portfolio management providers that are not the same as their backbone PLM vendors because of superior product portfolio management expertise embedded in the software. Requirements management and system engineering are becoming increasingly important to this PLM discipline. Consumer goods companies interested in adopting PLM should prioritize these competencies. Also, since mechanical hardware and electronics historically require longer lead times to develop and adjust than software, several Gartner clients report that software is often validated later in the development cycle and becomes the bottleneck to product release. Whenever possible, manufacturers should accelerate the software development process to alleviate software bottlenecks when management is anxious to deliver the product. Business Impact: Manufacturers using this class of software reduce their engineering change processes by more than 40%. The improvements in product data timeliness and accuracy have reduced scrap and rework substantially. This leads to significant reductions in product development costs, manufacturing costs and time to market. Increasing the emphasis on requirements management and system engineering improves market readiness and the ability to create product variants to different market sectors. Benefit Rating: High Market Penetration: 20% to 50% of target audience Maturity: Early mainstream Sample Vendors: Autodesk; Dassault Systemes; Oracle; PTC; SAP; Siemens; Sopheon Recommended Reading: "Q&A: Streamlined BOM Management From Design to Production for Discrete Manufacturers" "Case Study: Electrolux Increases Product Portfolio Management Discipline" "PTC Addresses Embedded Software With MKS Buy" "Three Top Issues to Address When Evaluating PLM Service Providers" "A Guide to Choosing PLM Service Providers, 2010 Update"
Appendixes
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Figure 3. Hype Cycle for Consumer Goods, 2012
expectations
Mobile Coupons Real-Time Customer Offer Engines Social Coupons Crowdsourcing Track and Trace Marketing Mix Modeling Social Gaming Ad Networks Climate-Driven Forecasting Assortment and Space Optimization Promotion Execution Monitoring
Demand Signal Repository Social Analytics Social Media Marketing Platforms Operations Intelligence
Master Data Management Enterprise Manufacturing Intelligence Inventory Strategy Optimization Trade Promotion Optimization
Retail Execution and Monitoring
MES Applications PLM for Durable Consumer Goods Stages 1 and 2 Sales and Operations Planning PLM for Packaged Food, Beverages and Personal Care Products PLM for Apparel, Footwear and Accessories
Manufacturer In-Store Monitoring Analytics Retail Activity Optimization Intelligent Image Interpretation
Consumer Packaged Goods E-Commerce
Trade Promotion Management (C&SI) Quality Process Management Applications E-Coupons 2D Bar Code Marketing As of July 2012
Technology Trigger
Trough of Disillusionment
Slope of Enlightenment
time
Plateau will be reached in: less than 2 years
2 to 5 years
5 to 10 years
more than 10 years
obsolete before plateau
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Hype Cycle Phases, Benefit Ratings and Maturity Levels

Table 1. Hype Cycle Phases Phase Innovation Trigger Definition A breakthrough, public demonstration, product launch or other event generates significant press and industry interest. During this phase of overenthusiasm and unrealistic projections, a flurry of wellpublicized activity by technology leaders results in some successes, but more failures, as the technology is pushed to its limits. The only enterprises making money are conference organizers and magazine publishers. Because the technology does not live up to its overinflated expectations, it rapidly becomes unfashionable. Media interest wanes, except for a few cautionary tales. Focused experimentation and solid hard work by an increasingly diverse range of organizations lead to a true understanding of the technology's applicability, risks and benefits. Commercial off-the-shelf methodologies and tools ease the development process. The real-world benefits of the technology are demonstrated and accepted. Tools and methodologies are increasingly stable as they enter their second and third generations. Growing numbers of organizations feel comfortable with the reduced level of risk; the rapid growth phase of adoption begins. Approximately 20% of the technology's target audience has adopted or is adopting the technology as it enters this phase. The time required for the technology to reach the Plateau of Productivity.
Trough of Disillusionment Slope of Enlightenment
Years to Mainstream Adoption

Table 2. Benefit Ratings Benefit Rating Transformational Definition Enables new ways of doing business across industries that will result in major shifts in industry dynamics Enables new ways of performing horizontal or vertical processes that will result in significantly increased revenue or cost savings for an enterprise Provides incremental improvements to established processes that will result in increased revenue or cost savings for an enterprise Slightly improves processes (for example, improved user experience) that will be difficult to translate into increased revenue or cost savings
High
Moderate
Low
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Table 3. Maturity Levels Maturity Level Embryonic Emerging Status

Products/Vendors

In labs Commercialization by vendors Pilots and deployments by industry leaders
None First generation High price Much customization Second generation Less customization
Adolescent
Maturing technology capabilities and process understanding Uptake beyond early adopters Proven technology Vendors, technology and adoption rapidly evolving Robust technology Not much evolution in vendors or technology Not appropriate for new developments Cost of migration constrains replacement Rarely used
Early mainstream
Third generation More out of box Methodologies Several dominant vendors
Mature mainstream Legacy
Maintenance revenue focus
Obsolete
Used/resale market only
Recommended Reading
Some documents may not be available as part of your current Gartner subscription. "Understanding Gartner's Hype Cycles" "Business Drivers of Technology for Consumer Goods Manufacturing Sales and Marketing" "Predicts 2013: Converging Technology Promises to Reinvent Sales and Marketing Processes in Consumer Goods Manufacturing" "Me Marketing: Get Ready for the Promise of Real-Time, Context-Aware Offers in Consumer Goods" "Hype Cycle for Consumer Goods, 2012"
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Hype Cycle For Consumer Good 252194

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Hype Cycle For Consumer Good 252194

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Hype Cycle for Consumer Goods, 2013

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What You Need to Know

The Hype Cycle

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Figure 1. Hype Cycle for Consumer Goods, 2013

Marketing Mix Modeling

Peak of Inflated Expectations

more than 10 years

obsolete before plateau

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The Priority Matrix

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Figure 2. Priority Matrix for Consumer Goods, 2013

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more than 10 years

Off the Hype Cycle

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"Cool Vendors in Consumer Goods 2013"

Intelligent Image Interpretation

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Manufacturer In-Store Monitoring Analytics

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Retail Activity Optimization

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Retail Mobile Shopping (Nonpayments)

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Assess your organization's readiness to have discussions about context-aware offers.

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Consumer Goods E-Commerce

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Demand Signal Repository

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Real-Time Customer Offer Engines

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"Personalization and Context-Aware Technology's Impact on Multichannel Customer Loyalty"

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