IBM Award Write Up

2017 Global
Integrated Commerce Order Management
CustomerValue Leadership Award

BEST PRACTICES RESEARCH
© Frost & Sullivan 2017 2 “We Accelerate Growth”
Content
Background and Company Performance ........................................................................3
Customer Impact and Business Impact ...................................................................5
Conclusion...........................................................................................................8
Significance of Customer Value Leadership ....................................................................9
Understanding Customer Value Leadership....................................................................9
Key Benchmarking Criteria ..................................................................................10
Best Practices Award Analysis for IBM.........................................................................10
Decision Support Scorecard .................................................................................10
Customer Impact ...............................................................................................11
Business Impact.................................................................................................11
Decision Support Matrix ......................................................................................12
Best Practices Recognition: 10 Steps to Researching, Identifying, and Recognizing Best
Practices .................................................................................................................13
The Intersection between 360-Degree Research and Best Practices Awards.....................14
Research Methodology ........................................................................................14
About Frost & Sullivan ..............................................................................................14

Background and Company Performance
Industry Challenges
The effects of digital transformation can most easily be seen in customer-facing services,
and retail is a case in point. In physical and digital commerce environments, new holistic
and data-driven approaches optimize personalization, and shoppers find themselves
empowered through mobile and wearable devices. Today’s shoppers can choose varying
degrees of service, and have started to interact with smart things, artificial intelligence (AI)-
powered chat bots, and robots that provide in-store directions, product information, and
keep shelves stocked.
For almost two decades, eCommerce has been on a streak of buoyant growth. Back in 1999,
the retail world was relatively straightforward. eCommerce accounted for less than 1% of
retail sales in the United States. Consumers mainly bought from physical stores and
completed most of their shopping journey there – from research to evaluation, purchase,
immediate collection and – if needed – service and/or return of products. The share of
eCommerce in the US is now approaching 9%.1
This surge is a reflection of ubiquitous
connectivity as much as of increasing trust of consumers in online retailers, and substantial
and continuous investments in eCommerce capability-building. While online still only
accounts for a fraction of the sales of bricks-and-mortar retail, there is no doubt that the
importance of eCommerce in retail sales will continue to increase.2
Frost & Sullivan research indicates that business-to-business (B2B) eCommerce increasingly
demands similar omnichannel capabilities. As early as 2013, an overwhelming majority of
online searches for B2B purchases globally were being made on mobile devices. As B2B and
business-to-consumer (B2C) requirements converge, B2B eCommerce holds even greater
promise.
At the same time, eCommerce is itself evolving as smart phones and tablets are becoming
quasi-ubiquitous and becoming shoppers’ instinctive port of call for information search of
any sort. The mobile channel, supported by mobile phones and tablets, is firmly establishing
itself as ever more important in the shopper journey. As a result, mCommerce is seeing
buoyant growth at mid-double digits. Nonetheless, information search, transaction, and
customer service increasingly become a sequence of touch points and shopper experience
fragments as shoppers roam in and out of physical and digital channels throughout their
shopping journey. “Not only do consumers expect you to be on all the channels they are
using, but if you are not – if there’s a ‘break in the chain’ – then they may jump to a
competitor … at each step of their purchase journey,” as stated by retail expert Chris
Jones.3
1
Compare: “QUARTERLY RETAIL E-COMMERCE SALES 1st QUARTER 2017”, last accessed 24 July 2017
2
Compare: https://www.frost.com/q296690090, last accessed on 25 July 2017
3
Jones, C. (2015), The Multichannel Retail Handbook, 2016 Edition, Redsock Management Ltd, page 22

Shoppers are rarely aware of, or care about, the myriad activities that have to take place
behind the scenes after an order is placed for it to be swiftly, efficiently and economically
delivered to them. Making the sale, clearly, is only half the job. As a result, retailers — both
those born online and those born offline — pay increasing attention to ensuring that their
order management, fulfillment and wider supply chain activities are up to the challenge.
In broad terms, order management is the process that ensures the seamless capture of
orders from various channels, ensures tracking and visibility, and merges this insight with
supply information, such as inventory databases, to provide the foundation for informed
business decisions about processing and fulfilment. The escalating demands of omnichannel
commerce mean that order management systems have to be become significantly more
powerful than the order-processing-focused back-office order management systems of the
past..
Most importantly, perhaps, order management acts as an overlay and integrative layer,
stitching together disparate legacy technology that could otherwise force companies to
manage every channel separately; all without the need for complicated, costly and time-
consuming development of the existing systems. Good order management systems
eliminate redundancies in systems, information flows and other processes, thus reducing
the risk of errors and increasing efficiency by providing a ‘single source of truth’. This
applies to the matching of order and fulfillment as much as to orchestrating the various
parties, their systems and processes involved in order replenishment.4
Distributed order management is a key component of modern order management solutions
and the cornerstone of what numerous retail technology vendors package into ‘omnichannel
solutions’. Basic distributed order management functionality is often present in adjacent
solutions such as eCommerce platforms, supply chain planning systems or enterprise
resource planning systems. However, such integrated capabilities are often limited to basic
fulfillment scenarios across only a limited number of stores, channels and distribution
centers.
Good, dedicated order management solutions go further and act as single orchestration
point and unifying platform for real-time visibility of orders across all merchant channels as
much as of inventory across locations. They broker orders with supply and drive supply
chain transparency, efficiency, customer experience and, ultimately, profitability.
4
Compare: Distributed Order Management—Lynchpin of Delivering on the Omni-Channel Retail Promise, last
accessed on 25 July 2017

Customer Impact and Business Impact
Deriving Customer Value from Doing the Right Things, Right Now
The emergence of eCommerce and omnichannel capabilities fall squarely into what Frost &
Sullivan tracks as the Connectivity and Convergence Mega Trend; this is a key facilitator of
the retail sector’s endeavors to merge the physical, digital and virtual into one integrated
model. Moreover, the convergence of offline and online retail is what Frost & Sullivan’s
Bricks and Clicks Mega Trend monitors and sees as set to become the norm. Physical stores
are under pressure but will remain cornerstones of the customer journey and brand
experience. However, their role is being transformed. Amazon's recent announcements that
it will open (additional) physical stores5
and its investment in the concept of a checkout-free
grocery shop6
are testament to these trends. These phenomena are closely linked to a third
Mega Trend that Frost & Sullivan tracks as Artificial Intelligence (AI) – The Cognitive Era.
This trend reflects the undeniable truth that the world is becoming software-driven,
software-managed and even software-defined as software is becoming more powerful (or
‘intelligent’). AI provides insight and personalization, enabling systems to learn and
improve, and continuously drive efficiencies. AI will aid revenue and cost optimisation along
the commerce value chain in business-to-business and business-to-consumer in myriad
ways. Plainly, everything is becoming more digitized and automated.
IBM has proven strategic foresight and caught these Mega Trends at the right moment.
Notably, it has engaged in early resolute development of the Watson AI brand; IBM has
succeeded in making Watson one of the world's best known AIs. The ‘cognitive’ theme
spans further across IBM’s whole Customer Engagement portfolio. Alongside building its
Watson brand, IBM has intelligently reconfigured its broad retail solutions portfolio brand
architecture. Its order management solution benefits from seamless integration into IBM’s
broad and deep solutions portfolio. Order management is part of the Watson Commerce
category and has touch points with the adjacent Watson Supply Chain category. These
two, together with Watson Marketing, sit on the Watson Customer Engagement platform.
Among the key capabilities IBM Watson Commerce order management brings together are
inventory visibility, distributed order management, order promising, delivery service
scheduling, and reverse logistics. It collects orders from online, call center and store. It
provides transparency through a single view of inventory and demand across channels and
throughout the supply chain.
IBM Watson Commerce order management makes it possible to offer accurate promised
delivery dates to customers, taking into account differences in selling channels, such as
store, Web, and marketplace. Watson Commerce order management especially excels at the
monitoring of inventory and proactive suggesting of flexible alternative ways of fulfilling an
5
See, for example, http://www.theverge.com/2016/5/18/11699544/amazon-new-retail-locations-prime-bezos,
last accessed on 03 July 2017
6
See, for example, https://www.ft.com/content/88399c00-bb03-11e6-8b45-b8b81dd5d080, last accessed on 04
July 2017

order in case of challenges. A typical scenario where this is relevant is when, for example,
home delivery would take long because the shipping warehouse(s) is/are out of stock, but
the item is available in a nearby shop, allowing immediate pick-up.7
IBM Watson Commerce
order management also leverages analytics capabilities from across IBM’s broader portfolio
and can perform complicated product configuration and quoting.
It would be remiss not to highlight another obvious and important strength of IBM Watson
Commerce order management: its honed global ecosystem of partners for collaboration in
innovation and execution including JDA, Salesforce, and Toshiba. Thanks to an open
philosophy, a great number of partners can simply build up on their knowledge of JAVA and
business processes to adapt Watson Commerce order management to suit a particular
customer’s business needs.
IBM Watson Commerce order management counts more than a dozen of the top 50 IR5008
amongst its users.9
It supports a variety of B2B selling models, including direct selling,
selling through distributors, through a network of partners, and through a chain of
enterprises.
Another differentiator of IBM Watson order management is the almost obsessive user
centricity that increasingly characterises IBM’s solutions portfolio, anchored in design
thinking. The company strives to embed design thinking into all of its solutions to ensure a
consistent and seamless experience across its portfolio. This ‘company DNA’ of user focus
results in, for example, user interfaces that provide a consistent user experience across
solutions. From a user role perspective, store associates, for example, are empowered
through mobile tools with new sources of insight and efficient processing, enabling them to
provide better customer service. Store managers can obtain real-time visibility of inventory
and a wide range of other store metrics beyond the scope of order management, such as
operational efficiency and customer satisfaction. Fulfillment directors and analysts are
empowered through analytics, data-driven insight, and recommendations that support them
in their quest to maximize profitability and support delivery of the best possible customer
experience.
Extracting Business Value from an Efficient and Solid Platform for Growth
As customer-facing technology changes at lightning speed, back-office systems frequently
struggle to attract similar levels of investment to keep up and may become performance
constraints in a two-speed IT system. Retail remains an archetype of a customer-facing
industry. Retailers that fail to engage with new technology in a holistic manner will be
unable to live up to their customers’ expectations and fade into irrelevance or entirely
disappear. IT leaders need to take a holistic approach to planning their services and
systems while focusing on delivering outcomes.
7
Compare: https://www.ibm.com/us-en/marketplace/order-management-platform, last accessed on 26 July 2017
8
Internet Retailer
9
IBM interview, 19 June 2017

Beyond the vital focus on helping deliver the best possible customer experience, IBM
Watson order management opens the door to a completely new set of efficiencies. Not only
does it allow fulfillment to be optimized against variables like fastest availability for the
customer, but also against such traditional, direct system-relevant and/or bottom-line-
driving metrics like capacity, shipping costs, and markdown avoidance. It “helps enterprises
increase fill rates and inventory turns, reduce markdowns, improve customer loyalty and
increase share of wallet. [It] enables you to make better decisions about how to promise
and fulfill customer orders, resulting in improved profitability and customer satisfaction”.10
“Central Nervous System for Fulfillment” is what IBM’s called its Order Management solution
in a recent conversation with Frost & Sullivan.11
And rightly so. Such high esteem for order
managmenet echoes with a recent Frost & Sullivan view.
It almost goes without saying that the whole range of deployment models from on-premise
to hosted, allowing for outsourcing, and pure cloud/SaaS, exist. The latter has been
experiencing particularly good uptake over the last 2 years, coming with the many
advantages of multi-tenanted cloud delivery, including continuous seamless updates.
Configurability and process modelling tools ensure both efficiency and reliability as an
extensible foundation for future growth.
Pricing is mostly based on order lines and scales so as to allow feasible entry points,
especially under the SaaS model, while sharing the synergies of scale with large users. This
ensures an attractive cost-of-ownership across various user need levels.
To stay ahead of the competition, IBM is commited to continuously investing and
maintaining its focus on innovation, and on further enhancing scalability and reinforcing the
use of AI and predictive analytics. IBM equally aims to be at the forefront of cloud and
mobile technologies to deliver personalized content to users anytime and anywhere. With its
heritage and relentless focus on staying at the forefront of innovation, IBM is positioned to
remain the ultimate trusted enterprise technology company, with many of its solutions
achieving ‘gold-standard status’ in their categories.
Further applications for Watson Commerce order management exist in relation to inbound
inventory, further upstream in the supply chain. This puts IBM Watson order management
in a privileged position for future growth on the back of the buoyancy of B2B eCommerce,
which holds even greater promise than B2C eCommerce.
10
https://www.ibm.com/marketplace/search/us/en-us?terms=Order%20fulfillment+, last accessed on 26 July
2017
11
Briefing on 19 June 2017

Conclusion
Order management has moved to center stage as an integrative layer of the commerce
architecture that ensures customer-facing technology is supported by the often complex and
disparate legacy systems to deliver on the promise of a seamless omnichannel shopper
experience.
Well integrated in a broader technology portfolio and consistently applied methodologies
and approaches make IBM one thing above all and that is credible; and it is a credible and
reliable provider that retailers need to ensure they can provide the all-important, positively-
differentiating customer experience to their customers.
As a category-defining leader, customer focus, a well-honed, best-in-class ability to
executive, and a relentless commitment to innovation, have enabled IBM to provide the
most outstanding customer value in Integrated Commerce Order Management solutions.
With its strong overall performance, IBM has earned Frost & Sullivan’s 2017 Customer Value
Leadership Award.

Significance of Customer Value Leadership
Ultimately, growth in any organization depends upon customers purchasing from a
company and then making the decision to return time and again. Delighting customers is,
therefore, the cornerstone of any successful growth strategy. To achieve these dual goals
(growth and customer delight), an organization must be best-in-class in three key areas:
understanding demand, nurturing the brand, and differentiating from the competition.
Understanding Customer Value Leadership
Customer Value Leadership is defined and measured by two macro-level categories:
Customer Impact and Business Impact. These two sides work together to make customers
feel valued and confident in their products’ quality and long shelf life. This dual
satisfaction translates into repeat purchases and a high lifetime of customer value.

Key Benchmarking Criteria
For the Customer Value Leadership Award, Frost & Sullivan analysts independently
evaluated two key factors—Customer Impact and Business Impact—according to the
criteria identified below.
Customer Impact
Criterion 1: Visionary Scenarios Through Mega Trends
Criterion 2: Addressing Unmet Needs
Criterion 3: Design
Criterion 4: Positioning & Competitive Differentiation
Criterion 5: Brand Equity
Business Impact
Criterion 1: Financial Performance
Criterion 2: Customer Acquisition
Criterion 3: Operational Efficiency
Criterion 4: Growth Potential
Criterion 5: Human Capital
Best Practices Award Analysis for IBM
Decision Support Scorecard
To support its evaluation of best practices across multiple business performance
categories, Frost & Sullivan employs a customized Decision Support Scorecard. This tool
allows our research and consulting teams to objectively analyze performance, according to
the key benchmarking criteria listed in the previous section, and to assign ratings on that
basis. The tool follows a 10-point scale that allows for nuances in performance evaluation.
Ratings guidelines are illustrated below.
RATINGS GUIDELINES
The Decision Support Scorecard is organized by Customer Impact and Business Impact
(i.e., these are the overarching categories for all 10 benchmarking criteria; the definitions
for each criterion are provided beneath the scorecard.). The research team confirms the
veracity of this weighted scorecard through sensitivity analysis, which confirms that small

changes to the ratings for a specific criterion do not lead to a significant change in the
overall relative rankings of the companies.
The results of this analysis are shown below. To remain unbiased and to protect the
interests of all organizations reviewed, we have chosen to refer to the other key
participants as Competitor 2 and Competitor 3.
Measurement of 1–10 (1 = poor; 10 = excellent)
Customer Value Leadership
Customer
Impact
Business
Impact
Average
Rating
IBM 9 9 9
Competitor 2 7 9 8
Competitor 3 6 8 7
Customer Impact
Criterion 1: Visionary Scenarios through Mega Trends
Requirement: Incorporating long-range, macro-level scenarios into the innovation strategy,
thereby enabling “first to market” growth opportunities solutions.
Criterion 2: Addressing Unmet Needs
Requirement: Implementing a robust process to continuously unearth customers’ unmet or
under-served needs, and creating the products or solutions to address them effectively
Criterion 3: Design
Requirement: The product features an innovative design, enhancing both visual appeal and
ease of use.
Criterion 4: Positioning & Competitive Differentiation
Requirement: Products or services address unique, unmet need that competitors cannot
easily replicate or replace.
Criterion 5: Brand Equity
Requirement: Customers have a positive view of the brand and exhibit high brand loyalty.
Business Impact
Criterion 1: Financial Performance
Requirement: Overall financial performance is strong in terms of revenues, revenue growth,
operating margin, and other key financial metrics.
Criterion 2: Customer Acquisition

Requirement: Customer-facing processes support the efficient and consistent acquisition of
new customers, even as it enhances retention of current customers.
Criterion 3: Operational Efficiency
Requirement: Staff is able to perform assigned tasks productively, quickly, and to a high
quality standard.
Criterion 4: Growth Potential
Requirements: Customer focus strengthens brand, reinforces customer loyalty, and
enhances growth potential.
Criterion 5: Human Capital
Requirement: Company culture is characterized by a strong commitment to quality and
customers, which in turn enhances employee morale and retention.
Decision Support Matrix
Once all companies have been evaluated according to the Decision Support Scorecard,
analysts then position the candidates on the matrix shown below, enabling them to visualize
which companies are truly breakthrough and which ones are not yet operating at best-in-
class levels.
High
Low
Low High
BusinessImpact
Customer Impact
IBMCompetitor 2
Competitor 3

Best Practices Recognition: 10 Steps to Researching,
Identifying, and Recognizing Best Practices
Frost & Sullivan analysts follow a 10-step process to evaluate Award candidates and
assess their fit with select best practice criteria. The reputation and integrity of the
Awards are based on close adherence to this process.
STEP OBJECTIVE KEY ACTIVITIES OUTPUT
1
Monitor,
target, and
screen
Identify Award recipient
candidates from around the
globe
• Conduct in-depth industry
research
• Identify emerging sectors
• Scan multiple geographies
Pipeline of candidates who
potentially meet all best-
practice criteria
2
Perform
360-degree
research
Perform comprehensive,
360-degree research on all
candidates in the pipeline
• Interview thought leaders
and industry practitioners
• Assess candidates’ fit with
best-practice criteria
• Rank all candidates
Matrix positioning of all
candidates’ performance
relative to one another
3
Invite
thought
leadership in
best
practices
Perform in-depth
examination of all candidates
• Confirm best-practice criteria
• Examine eligibility of all
candidates
• Identify any information gaps
Detailed profiles of all
ranked candidates
4
Initiate
research
director
review
Conduct an unbiased
evaluation of all candidate
profiles
• Brainstorm ranking options
• Invite multiple perspectives
on candidates’ performance
• Update candidate profiles
Final prioritization of all
eligible candidates and
companion best-practice
positioning paper
5
Assemble
panel of
industry
experts
Present findings to an expert
panel of industry thought
leaders
• Share findings
• Strengthen cases for
candidate eligibility
• Prioritize candidates
Refined list of prioritized
Award candidates
6
Conduct
global
industry
review
Build consensus on Award
candidates’ eligibility
• Hold global team meeting to
review all candidates
• Pressure-test fit with criteria
• Confirm inclusion of all
eligible candidates
Final list of eligible Award
candidates, representing
success stories worldwide
7
Perform
quality check
Develop official Award
consideration materials
• Perform final performance
benchmarking activities
• Write nominations
• Perform quality review
High-quality, accurate, and
creative presentation of
nominees’ successes
8
Reconnect
with panel of
industry
experts
Finalize the selection of the
best-practice Award recipient
• Review analysis with panel
• Build consensus
• Select recipient
Decision on which company
performs best against all
best-practice criteria
9
Communicate
recognition
Inform Award recipient of
Award recognition
• Inspire the organization for
continued success
• Celebrate the recipient’s
performance
Announcement of Award
and plan for how recipient
can use the Award
10
Take
strategic
action
Upon licensing, company is
able to share Award news
with stakeholders and
customers
• Coordinate media outreach
• Design a marketing plan
• Assess Award’s role in future
strategic planning
Widespread awareness of
recipient’s Award status
among investors, media
personnel, and employees

The Intersection between 360-Degree Research and Best
Practices Awards
Research Methodology
Frost & Sullivan’s 360-degree research
methodology represents the analytical
rigor of our research process. It offers a
360-degree-view of industry challenges,
trends, and issues by integrating all 7 of
Frost & Sullivan's research methodologies.
Too often companies make important
growth decisions based on a narrow
understanding of their environment,
leading to errors of both omission and
commission. Successful growth strategies
are founded on a thorough understanding
of market, technical, economic, financial,
customer, best practices, and
demographic analyses. The integration of
these research disciplines into the 360-
degree research methodology provides an
evaluation platform for benchmarking
industry participants and for identifying those performing at best-in-class levels.
About Frost & Sullivan
Frost & Sullivan, the Growth Partnership Company, enables clients to accelerate growth
and achieve best-in-class positions in growth, innovation and leadership. The company's
Growth Partnership Service provides the CEO and the CEO's Growth Team with disciplined
research and best practice models to drive the generation, evaluation and implementation
of powerful growth strategies. Frost & Sullivan leverages more than 50 years of
experience in partnering with Global 1000 companies, emerging businesses, and the
investment community from 45 offices on six continents. To join our Growth Partnership,
please visit http://www.frost.com.
360-DEGREE RESEARCH: SEEING ORDER IN
THE CHAOS

IBM Award Write Up

Recommended

Recommended

More Related Content

What's hot

What's hot (19)

Similar to IBM Award Write Up

Similar to IBM Award Write Up (20)

More from Claudia Toscano

More from Claudia Toscano (20)

Recently uploaded

Recently uploaded (20)

IBM Award Write Up