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From global connection
to global orchestration
Future business models for high performance
where technology and the multi-polar world meet
Contents
Foreword ................................................................... 1
Executive summary................................................ 2
Methodology............................................................ 5
The multi-polar world ........................................... 6
After the storm:
Two defining trends of the next era ................. 8
The new market-making forces ......................... 12
Mastering orchestration ....................................... 17
Implications for government .............................. 22
Last word .................................................................. 24
Case studies ............................................................. 25
Sources ...................................................................... 30
Foreword                Ten years ago, the world entered a
                        period in which globalization would
                        come of age. It was to be an evolution
                                                                    the new market-making forces at
                                                                    work. For companies and markets,
                                                                    the implications of these forces, even
                        in both substance and form. The             in embryonic form, are profound.
                        rise of emerging markets planted
                        new economic flags, diffusing and           Organizations have a great
                        rebalancing economic power across           opportunity to harness these forces
                        ever more countries and regions.            to their advantage to optimize, extend
                        At the same time, globalization             or even transform their business
                        morphed from being a chiefly one-           models. Locating and orchestrating
                        way phenomenon—with exports and             the right global connections outside
                        labor flowing from East to West—            the organization become, perhaps
                        into an indisputably multidirectional       paradoxically, the key to achieving an
                        and interdependent contest for              ever closer focus on the competitive
                        consumers, resources, capital, talent       essence of the business. Excellence
                        and innovation. The economic map            in networks, relationships and data-
                        became truly multi-polar, the world         driven insight will be required. Some
                        larger in geographic scope yet smaller      of the necessary responses may seem
                        in economic distance.                       counterintuitive. Throwing open
Mark Foster                                                         the doors of the company will not
                        The past two years, though, will be         come naturally. Broadening the field
Group Chief Executive   remembered less for trends than for         of dialogue takes time and effort;
                        events. The attention of business           customer insight requires work. Yet
Global Markets and
                        and political leaders everywhere was        these investments will help define
Management Consulting   rightly absorbed by combating the           competitive advantage for the future.
                        worst effects of the financial crisis
                        and economic downturn. Now, as              Accenture’s multi-polar world research
                        the dust thrown up by the global            program was launched in 2006 to
                        downturn begins to settle, business         help companies and public-sector
                        leaders and policymakers are starting       organizations striving to achieve
                        to focus once more on the longer-           high performance respond to the
                        term influences shaping tomorrow’s          changes in the world’s economies.
                        economy. The advent of a new decade         Our aspiration for this report, the
                        is a natural time to take stock of          fourth in the series, is that it will
                        the interplay of the forces in global       spur organizations to move beyond
                        economics and their implications for        straightforward connectedness toward
                        business and government.                    an effective global orchestration of
                                                                    powerful new economic possibilities
                        Two trends that feature prominently         that increasingly lie beyond the
                        in my conversations with business           traditional frontiers of the enterprise
                        and government leaders are                  and fully harness the potential of
                        the acceleration of multi-polar             pervasive new technology waves.
                        globalization and the transformative
                        potential of newly mature information
                        technologies—including cloud, mobile
                        and collaborative computing. These
                        two trends have not only continued
                        apace during the downturn, but have
                        drawn added strength and speed from
                        it, spurred by the intensifying quest for   Mark Foster
                        efficiency, competitiveness and new
                                                                    Group Chief Executive
                        customers across the world.
                                                                    Global Markets and
                        Less well known is how IT and the           Management Consulting
                        multi-polar world are also enabling
                        individuals and enterprises to connect
                        and communicate in order to create
                        value in new and different ways. Our
                        research has sought to look beyond
                        the daily headlines about social
                        networking, blogging and crowd-
                        sourcing to reveal and understand


                                                                                                             1
Executive summary




After the storm: two                     of emerging-market companies in the         By reducing barriers—such as access
                                         Fortune Global 500—a leading ranking        to markets, upfront investment,
defining trends for the                  of the world’s largest companies—has        and economies of scale—IT and the
next era                                 risen from 20 in 1995 to 91 in 2009.        multi-polar world are intensifying
                                                                                     competition. New entrants from
As the world emerges from a period       At the same time, a number of               emerging markets, free of legacy
of economic torpor, attention is         information technologies are maturing.      systems and processes, can access
refocusing on two long-term trends       The levels of access, cost, standards,      pay-per-use business infrastructure.
whose continued rise has been            openness, reliability and ease of use       Niche players anywhere in the world
obscured by the recent turmoil:          of both hardware and communication          can build competitive cost bases
the changing shape of globalization      capabilities have developed to the          and cut new paths to market. New
and the maturing of information          point at which software can be readily      consumers, better connected and
technology (IT).                         used to combine them to newly               better informed than ever, are entering
                                         powerful effect in business and social      the global marketplace.
The rise of a multi-polar world
                                         settings. The coming together of cloud
economy—in which economic power
                                         services, collaborative computing,
and activity are increasingly diffused
                                         mobile communications and other
across geographic borders—continues
                                         technologies creates new options for
apace. The recovery now under
                                         businesses in all regions. In particular,
way is demonstrating the resilience
                                         in responding to and reinforcing
of emerging markets. Developing
                                         growth in emerging markets, IT adds
economies already account for more
                                         weight to the shift toward economic
than half of world output. They
                                         multi-polarity.
have not only weathered the crisis
better than developed economies,
but they are also helping to power
the global recovery, generating the
bulk of expected growth in the global
economy in 2010. The confident rise of
emerging economies is mirrored in the
corporate arena. Indeed, the number


2
Six new market-making                       • New businesses that use IT              • Technology is unleashing consumer-
                                            to build new bridges between              to-consumer content as like-minded
forces                                      producers and customers are               individuals share information and
Yet it is not simply a story of             emerging. From rural banking to           opinion about products and services—
competition becoming more intense:          collaborative apps platforms, these       often in an open and global forum
competition itself is changing. The         intermediary players are harnessing       where the objective is not profit,
intertwining of IT and the multi-polar      new technology to make markets            but an increase in the knowledge or
world has made a number of new              in places where geographic or             economic welfare of participants.
economic relationships possible for the     economic distance had previously          Shifting market power away from
first time. This sets the stage for doing   held supply and demand apart.             producers toward consumers, this
business in completely new ways—not                                                   force has implications for reputation,
                                            • Changes in the capability, reach
by simply connecting across the multi-                                                quality, the meaning of brand and,
                                            and cost of IT are enabling new forms
polar world but by orchestrating the                                                  where content can be digitized, for the
                                            of business-to-business commerce.
six new market-making forces that                                                     survival of entire industries.
                                            Thanks to cloud computing and the
Accenture's research identified:            myriad business models it and other       • IT is allowing consumers to
• Co-production between companies           technologies make possible, even          participate in peer-to-peer markets
and their customers or suppliers is         for niche providers, companies have       for the cooperative production of
blurring traditional boundaries within      greater access—fast, across borders,      goods and services in tandem with
industry value chains. Innovation and       and often at variable cost—to efficient   other consumers. Often driven by a
product design are two areas in which       and industrialized functions to support   desire to unlock new efficiency or
enterprises are using new technologies      a more focused core.                      effectiveness in a product or service,
to tap into the collaborative input                                                   peer-to-peer players can quickly
of a growing number of stakeholders                                                   open up new market space while also
around the world.                                                                     reducing the power of alternative
                                                                                      providers. For example, international
                                                                                      peer-to-peer microfinance platforms
                                                                                      are challenging assumptions about
                                                                                      lending to small entrepreneurs in high-
                                                                                      growth economies.



                                                                                                                            3
• Individuals are collaborating           Optimization: Achieving operational        Second, they develop deep and
electronically to engage in cooperative   excellence in current business             wide networks with consumers,
consumption. Social computing can         activities. New information                entrepreneurs and other businesses.
make it easy for consumers to signal      and collaboration tools can                By opening themselves up to the
their group buying intentions—and also    enhance the quality of products            ecosystem, high-performance
to increase that collective bargaining    and services, improve customer             businesses will draw strength beyond
power by advertising the offer and        service and reduce costs.                  the sum of their parts. By connecting
enlarging the cluster of committed                                                   to consumers through social
                                          Extension: Developing current
customers. This “team buying” alters                                                 computing and advanced analytics,
                                          business in new areas. Companies
the dynamics of discounting and of                                                   they will undertake an open dialogue
                                          can harness new technologies
product tailoring.                                                                   that directs product and service
                                          to extend existing business
                                                                                     enhancement while building loyalty. By
These new market-making forces,           models into additional, or
                                                                                     opening up to external entrepreneurs
and the full range of IT developments     completely new, industries.
                                                                                     and businesses, they can co-opt the
they draw on, have big implications.      Transformation: Growing new                experience and capabilities of others
Businesses will have to operate in a      business in new areas. Companies can       to develop new, innovative solutions
much more complex ecosystem, where        deploy IT to build new business models     at low cost. And by divesting some
customers, suppliers, competitors         for entry into previously unreachable—     in-house functions to external service
and other producers are increasingly      or even unimagined—markets.                providers, such as cloud owners and
interconnected and interdependent.                                                   horizontal service providers, they can
The new forces heighten a number          The instruments of                         increase efficiency and reduce costs.
of business challenges, including
the management of networks of             orchestration
third parties, competition from new       Orchestrating market-making forces
market entrants, and the protection of    is a complex undertaking. It requires
proprietary information and data. They    an understanding of how these forces
also present significant opportunities    are spawning new business models.
that were not previously available,       For the majority of businesses, the
including working more efficiently,       question will be: where to start?
collaborating in new ways with            Our research has identified two
business partners, and reaching new       hallmarks of success that will be
markets or customer groups.               increasingly important to underpinning
                                          a company’s competitive performance.
In the government sphere, too, the        Understanding these practices offers a
market-making forces offer an             guide to businesses seeking to emulate
opportunity to improve public-service     and excel against the competition.
value and policy effectiveness, as well
as the prospect of innovative solutions   First, they actively seek greater
to social challenges—ranging from         insight. Tomorrow’s high-performance
energy usage to security—within and       businesses will exhibit unusually high
across national borders.                  levels of business intelligence, putting
                                          in place infrastructure with which they
Mastering orchestration                   can constantly amass and analyze
                                          data to glean valuable insight. Their
Strikingly, only 11 percent of business
                                          leaders will regularly communicate
leaders we surveyed believe that
                                          the importance of round-the-clock
their companies are significantly
                                          alertness, displaying advanced
advanced in their strategic response
                                          levels of awareness themselves
to the disruptive business environment
                                          and gearing their organizations’
brought about by the intersection
                                          talent-development programs
of the multi-polar world and
                                          accordingly. In an age when open-
developments in IT. For businesses
                                          source information services have
looking to harness the changed
                                          made everyone an "expert," there is
ecosystem to their advantage, the
                                          enormous potential for competitive
imperative is to move beyond global
                                          advantage by employing advanced
connectedness toward a more
                                          tools for capturing data and analyzing
proactive, continuously managed
                                          it to produce rich, timely, actionable
global orchestration of the new
                                          insights. A passion for data-driven
market-making forces that are now
                                          continuous improvement will become
available. A number of businesses,
                                          a fundamental tenet of a high-
both traditional and new, are already
                                          performance organization’s culture.
doing so to unlock core business
improvement in three areas:

4
Methodology
This report is based on two major         The 420 survey participants are all        The respondents’ companies represent
strands of research. First, we analyzed   senior business leaders. Close to one-     a wide range of annual revenues,
the interaction between information       third (32 percent) are chief executives,   from less than US$50 million
technologies and globalization, drawing   presidents or managing directors;          (32 percent of respondents) to
on a range of secondary data sources,     30 percent are other C-level               more than US$10 billion (18 percent
our extensive experience working          executives; and 30 percent are senior      of respondents). More than half of
with clients in each of these areas       vice presidents, vice presidents           the respondents (54 percent) work
and the groundbreaking work of the        or directors. Respondents are              for companies that have been in
Accenture Technology Labs. Second,        distributed across 30 industry             business for more than 20 years.
we commissioned the Economist             sectors, including financial services,
Intelligence Unit (EIU) to conduct a      electronics, high technology,
survey to identify how companies          consumer goods, professional
are evaluating and responding             services, chemicals, energy, utilities,
to developments in information            telecommunications, automotive,
technology and globalization.             retail, and media & entertainment.

The fieldwork for the EIU survey was      Thirty-one percent of respondents are
conducted in October and November         from companies primarily based in the
2009. The survey asked respondents        Asia-Pacific region: 30 percent are
which global developments and IT-         from North America; and 26 percent
related trends would have the greatest    are from Western Europe. Other
impact on the business environment,       respondents come from the Middle
which IT-related opportunities and        East, Africa, Latin America and Eastern
threats their companies faced and         Europe. Approximately one-third of
what strategies they were planning        companies have physical operations
to implement in response to those         in more than 20 countries, while 18
opportunities and threats.                percent have physical operations only
                                          in their home markets.




                                                                                                                        5
The multi-polar world
Accenture uses the term “multi-polar     world—new consumers, talent,            Talent
world” to describe the diffusion         innovation, resource sustainability,    While many Western economies
of global economic power across          and capital—that multinational          are grappling with the effects of
a widening range of regions and          businesses can harness for short-term   contracting workforces and shortages
countries, with that diffusion           flexibility and long-term growth.       of specialized skills, emerging-
accelerated by information technology,   These dimensions, which span            market workforces are set to expand
greater economic openness, and           emerging and developed economies,       dramatically. In the decade to 2020,
the growing size and reach of            constitute the arena in which           the working-age population of
multinational companies.                 companies now need to compete.          emerging economies is expected to
                                                                                 increase by more than 500 million,
While many of the new poles of           New consumers                           compared with an increase of only
economic activity are in the “Big 6”     Many emerging markets continue          3.7 million in developed economies.1
emerging economies—Brazil, China,        to enjoy impressive growth in
India, Mexico, Russia and South          consumer spending, bolstered by         Innovation
Korea—increasingly they include          long-term fundamentals such as          Innovation is no longer the exclusive
next-wave locations such as Egypt,       population growth, rising incomes       province of developed markets.
Nigeria and Turkey. Together with the    and an emerging middle class of         A combination of investment,
more-established centers of economic     consumers who aspire to developed-      education and a strategic policy
activity, these rapidly emerging         world standards of living. IT offers    focus on new technologies has
economies are radically reshaping        businesses new ways to reach and        spurred the development of new
the economic geography in which          serve these emerging customers          clusters of innovation in emerging
businesses must operate.                 and to craft innovative business        economies. Witness the rise of
                                         models that uncover otherwise           nanotechnologies and biotech in
Accenture first explored the             latent pools of demand.                 Beijing, digital media and genomics
characteristics and drivers of                                                   in Seoul, biofuels in Brazil and
this new phase of globalization                                                  automotive technologies in Poland.
in its 2007 study, The Rise of the
Multi-Polar World. In that study
Accenture identified five increasingly
competitive and interdependent
dimensions to the multi-polar

6
Resource sustainability                     The canvas of the multi-polar world        and consistently different ways. In
Because of global commodity                 also features a large and increasingly     particular, the findings showed that
markets and optimized supply chains,        diverse cast of public and private         companies need to:
companies feel the effects of volatility    players operating alongside and
                                                                                       Create geographic options—
in prices or supply movements more          competing with traditional, developed-
                                                                                       proactively and continually look
quickly than ever. At the same time,        market multinationals. Chief among
                                                                                       outward to sense their environment
they face the prospect of a world with      these are the emerging-market
                                                                                       and make focused choices about where
dwindling fossil-fuel resources—and         multinationals, which have become
                                                                                       to compete and whom to engage.
increasing obligations to preserve          increasingly prominent as they
natural resources. The challenge is         expand their international activities.     Be authentically local—embed
to find the right balance of supply         These companies were the subject of        themselves with full commitment in
security, price stability, efficiency       Accenture’s second multi-polar world       their chosen markets, weaving their
gains and environmental sustainability.     study, in 2008, titled The Rise of the     operations into the fabric of local
                                            Emerging-Market Multinational.             business and society.
Capital
                                            In the third multi-polar world study,      Network the organization—create
Pools of capital are increasingly visible
                                            in 2009, titled Strategies for achieving   organizations that are permeable, both
in the emerging world—not only in
                                            high performance in a multi-polar          internally and externally, enabling
nascent capital markets but also
                                            world: Global choices for global           flows of ideas, people and industry
via new players such as emerging-
                                            challenges, Accenture studied how          leading practices to the right places at
market multinationals and sovereign
                                            high-performance businesses had            the right time.
wealth funds. With approximately
US$3.9 trillion in assets under             been evolving their strategies in
management in 2008, sovereign               response to the multi-polar world.
wealth funds—state-backed entities          The research found that high-
that invest surplus foreign reserves        performance businesses conceive of
overseas—dwarf private equity and           and execute their strategies in new
could reach US$8 trillion by 2015,
according to some estimates.2




                                                                                                                              7
After the storm:
Two defining trends of the next era




When the dust created by the              The shift to a multi-polar                 • Emerging markets are expected to
recession has settled, it may not be                                                 generate the bulk of the growth in the
an exaggeration to view multi-polar       world is accelerating                      world economy in 2010;4
globalization and new information         For some time now, businesses have         • Emerging markets attract a larger
technology developments as the two        found themselves operating in a            share of foreign direct investment
defining trends of the era ahead.         world where economic power and             than developed markets, and drive
Powerful individually, each augments      possibility are increasingly diffused      an increasing share of outward
and enhances the other. Their interplay   across geographic borders, especially      investment flows;5 and
is setting the stage for substantial      to emerging markets—a process that
changes in how businesses see and         Accenture terms the rise of the multi-     • The six largest emerging economies
interact with the world around            polar world (see “The multi-polar          (the “B6”)—Brazil, China, India, Mexico,
them—in how they orchestrate their        world”). In the depths of the downturn,    Russia and South Korea—are on a path
interactions with other entities rather   it was easy to wonder whether this         to grow by 5.1 percent in 2010.6
than simply connecting with them.         shift to emerging markets had stalled.
                                          Levels of risk aversion rose sharply and   This rebalancing of economic activity
Among business leaders worldwide,         investors and businesses withdrew          features not only the B6; it is evident
there is a palpable sense that            capital, often to shore up core            also in the next wave of emerging
significant change is afoot. Forty-one    businesses at home. But the nascent        economies, among them Indonesia,
percent of executives believe new         recovery is now demonstrating the          Malaysia, Nigeria, Thailand and Turkey.
players from emerging markets to be       resilience of emerging markets.            Much of this growth results from
one of the two developments that          Developing economies have not only         emerging-market businesses that have
will have the most impact on business     weathered the crisis better than           continued their onward march amid
over the next five years, according to    developed economies, but they are also     global recession. Indeed, the number
Accenture’s survey; 35 percent pointed    helping to power the global recovery:      of emerging-market companies in the
to new technology capabilities                                                       Fortune Global 500—a leading ranking
(see Figure 1).                           • In 2009, for the first time, emerging    of the world’s largest companies—has
                                          markets accounted for half of the          more than quadrupled in less than
                                          global economy;3                           15 years, from 20 in 1995 to 91
                                                                                     in 2009.7




8
Figure 1: Trends in emerging markets and new information technologies are the most-
cited developments impacting businesses over the next five years

In your view, which two of the following developments will have the most significant impact on
your business over the next five years? (Select two)

Growth in size and reach of new players from                                                     41%
emerging markets

Increase in the capabilities of new information                                            35%
technologies

Slower economic growth in developed markets                                         27%

Emergence of a changed corporate finance
                                                                                 24%
landscape

Greater involvement of government in                                             23%
markets/business

Greater access to customers globally                                         20%

Greater access to inputs (resources, talent, ideas)
                                                                      12%
from international markets

Climate change and the policy/regulatory                              12%
responses to it

Rising security threats                                         5%




Emerging-market companies have                           While the multi-polar world increases         Software has been the essential
tended to fare well during the                           the scale of the business landscape           catalyst in this revolution. It has
recession, partly owing to strong local                  and introduces new competitors,               brought together hardware and
growth but also to highly competitive                    developments in IT are creating new           connective infrastructure to apply
cost structures and a long history of                    connections and new possibilities             technologies to real-world problems,
serving customers at low (or multiple)                   for businesses to achieve high                needs and wants—both in business
price points. For example, Indian                        performance around the globe.                 and social spheres. Businesses
conglomerate Godrej has created                                                                        are now increasingly using a wide
a new type of refrigerator priced                        The continuing IT revolution                  variety of newer technologies
between US$65 and US$75; using                                                                         to meet their objectives. These
solid-state technology instead of a                      While the attention of policymakers           range from pure hardware such
compressor, the unit is lightweight                      and business leaders has been focused         as cloud-based servers or remote
and can cool 30 liters of food.8                         on the biggest economic upheaval of           sensors, and communications
Similarly, China’s Zhongxing Medical                     the past 50 years, the rapid march of         technologies such as mobile and
has transformed the domestic                             information technologies has gone             broadband, to complex software-
radiography market in the past                           largely unnoticed. During this time,          driven technologies such as social
decade by creating a technology that                     information technologies have reached         computing and advanced analytics.
renders X-ray images in digital form,                    new levels of maturation in terms of
bypassing the traditional lengthy                        access, cost, openness, standards,            Yet IT can be only as relevant as the
and expensive chemical process. By                       reliability and usability. This is true       content it holds, transmits or serves
2009, the company had a 50 percent                       both of IT hardware—including servers,        up. This period of IT maturation
share of the Chinese market—despite                      PCs, smartphones and sensors—and              coincides with increasing levels
40 percent price cuts by developed-                      of communication technologies, with           of digitization—the availability of
market competitors.9                                     mobile and broadband connectivity             content in electronic form. Not only
                                                         nearly ubiquitous in the developed            are books, music and news all online,
                                                         world and increasingly common across          but increasingly so are taxes, medical
                                                         much of the developing world.                 records and bank deposits. And in the
                                                                                                       future, remote sensors will allow a raft
                                                                                                       of physical objects to interact with
                                                                                                       people—and each other.


                                                                                                                                              9
Figure 2: New developments and capabilities in IT                                                   Remote sensors—These create
                                                                                                    new ways to track goods across
                                                                                                    the supply chain and to obtain
                                                                                                    information about product usage.
                                        Predicting                                                  They are an important element in
                                        information                                                 the development of “smart grids”
                                                                                                    that integrate households and power
                                                                                                    grids in ways that increase energy
                                                                                                    efficiency and reduce energy use.
                                        Analytics
                                                                                                    Advanced analytics—This is the
  Moving                                                                          Analyzing
  information                                                                     information
                                                                                                    extensive use of data, statistical
                                                    Collaborative                                   analysis, explanatory and predictive
                                                    computing                                       models, and fact-based management
                         Mobile
                                                                                                    tools to drive decisions and
                                                                                                    actions.10 Businesses can harvest
                                               Cloud
                                               computing                                            greater insight and competitive
                                                                                                    advantage from the mass of data
                              Sensors
                                                                                                    accumulated in the course of
                                  IT developments                                                   producing and selling to customers
                                                                                                    or operating plants and equipment.
                Sensing                                             Processing
                information        IT capabilities                  information
                                                                                                    These developments in IT are not only
                                                                                                    changing the options available to
                                                                                                    businesses, but are also accelerating
                                                                                                    the move toward a multi-polar world.

                                                                                                    IT-powered multi-polarity
                                                                                                    IT continues to make the world
                                                                                                    feel smaller to organizations. As
                                                                                                    the availability, affordability and
The business impact of a                                 client process clouds. The emergence       power of IT continue to increase,
selection of current technologies                        of cloud providers serving many            geographic distance becomes less
                                                         different companies will promote           relevant for today’s multinationals.
So what will the transformation in the                   greater standardization and                Bangalore can be as convenient
power of information technologies                        industrialization of business processes,   as Boston, Seoul as accessible as
mean for business? Earlier phases                        yielding significant scale efficiencies    Seattle. Cost-effective and powerful
of the IT revolution enabled us to                       and allowing the optimization of IT        IT makes it possible to closely monitor
move and process information,                            functions across the entire cloud.         a manufacturing plant in Vietnam or
powered by computer processing                                                                      to track components across a global
cycles, dependable and sophisticated                     Collaborative (social) computing—          supply chain. The Internet instantly
software, and networking capabilities.                   This encompasses a wide variety of         links suppliers directly to billions of
Recent developments are enabling IT                      technology tools that allow real-time      potential customers across the world.
to sense, analyze and even predict                       networking and collaboration among         The growing global middle class,
information, creating new capabilities                   users, both at home and increasingly       more and more reachable through
in the generation and application of                     in the workplace. It facilitates the       the Internet and mobile phones,
business insight (see Figure 2).                         creation of online communities of          offers businesses the prospect of
                                                         interest that companies can tap into       reaching millions of new consumers
Cloud computing—This provides                            to source ideas, test products and         with greater discretionary spending
businesses with access to computing                      services, and market new offerings.        power (see Figures 3, 4 and 5).
power, software and process                                                                         Mobile technology, in particular, has
management functions from a remote                       Advances in mobile technologies—           been crucial in increasing access
third-party provider, enabling them                      These technologies are now coming          to markets, particularly among the
to pay “per use” and avoid the need                      into their own, not just for personal      world’s poorest. Mobile phones, for
to own significant infrastructure                        communication, but also for remote         example, allow farmers to access
themselves. Types of cloud services                      telemetry. Mobile technologies allow       live market prices for their produce,
include IT infrastructure (access to                     businesses to reach customers at any       and they bring banking services to
hardware and servers), platforms                         time wherever they are, tailor services    remote areas for the first time. A
(development environments for                            to the customer’s exact location and       recent Accenture survey of consumers
applications), applications (accessed                    sell to previously unreachable markets.    revealed that those in emerging
through Web browsers) and multi-                                                                    markets are more than twice as


10
likely as those in developed markets      Figure 3: Growth in Internet connectivity
to buy and use consumer IT—such           Percentage of the population using the Internet
as Web-enabled mobile phones,             80
smartphones and netbooks—in
2010.11 Advances in IT also allow         70
companies to access the increasingly      60
sophisticated workforces of the
                                          50
emerging world, meaning that ever-
more-complex tasks can be carried         40
out across virtual global networks.
                                          30

The new capabilities of IT have           20
the potential to benefit the
                                          10
competitiveness of emerging-market
multinationals. Using IT, they can        0
                                                   1999      2000      2001       2002       2003       2004         2005   2006   2007   2008
leapfrog to create cheaper, more
                                                Developed economies      Emerging economies
flexible business processes without
the concerns of legacy IT that confront   Source: International Telecommunications Union, 2009; Accenture analysis
their developed-market counterparts.
It is no wonder that, between 2010
and 2013, IT spending is forecast to      Figure 4: Growth in use of mobile telephones
grow 5.8 percent per year in emerging     Total number of mobile cellular subscriptions in the world (in billions)
markets compared with 3.6 percent in      4.5
developed markets.12
                                          4.0

IT and the multi-polar world              3.5

have enlarged the business                3.0

ecosystem                                 2.5
                                                                                                                                           77%
                                          2.0                                                                                      74%
Taken together, the rise of the multi-                                                                                      71%
polar world and the maturation of IT      1.5
                                                                                                                     67%
are changing the nature of competition                                                                   62%
                                          1.0                                                   57%
                                                                                  53%
and the nature of stakeholder                                41%
                                                                       47%
                                          0.5      36%                                                               33%    29%    26%     23%
interactions. The ecosystem in which                         59%       53%        47%           43%      38%
                                                   64%
businesses have traditionally operated     0
                                                   1999     2000       2001       2002       2003       2004         2005   2006   2007   2008
has enlarged and become more
                                                Developed economies       Emerging economies
complex: more competition, more
stakeholders, more customers, spread      Source: International Telecommunications Union, 2009
across more geographic boundaries.
As the following chapter explains,
the two trends are also combining to      Figure 5: Growth of the middle class
generate new ways of creating value
                                          Number of households (in millions) with annual incomes greater than US$5,000
among stakeholders—with important         (at constant prices and at purchasing power parity)
consequences for businesses.
                                          800

                                          700

                                          600

                                          500

                                          400

                                          300

                                          200

                                          100

                                           0
                                                    1999       2004        2009         2014f
                                                Developed economies       Emerging economies

                                          Source: EIU




                                                                                                                                                 11
The new market-making forces




The business ecosystem is now              Figure 6: A perspective of ecosystem disruption
populated by more stakeholders and
competitors, complicating the terrain      6a. Traditional view of the business ecosystem
for companies around the world.
However, a further reality is dawning:
the nature of competition itself is               B2B                                       B2C                              End-consumers
changing. Accenture has identified              companies                                 companies

how the intertwining of IT maturation
and the rise of the multi-polar world
are generating six forces that are
creating new market potential
                                           6b. New market-making forces are creating a more complex business ecosystem
(see Figure 6). These forces are leading
to novel configurations of capital,
talent and resources that open up
                                                                       1                                        1                        4
                                                  B2B                                       B2C
more efficient forms of production;             companies                                 companies
                                                                                                                             End-consumers
unlock new products and services;
introduce new business models; and                            3                                                          6               5
open more components of the value
                                                                         2                       2             2
chain to collaborative execution.

                                                                                      Intermediaries




                                                  Co-production between firms and                     Consumer-to-consumer content sharing
                                            1     their customers and suppliers
                                                                                                4
                                                  Using IT to create new bridges                      Peer-to-peer markets operating outside
                                            2     between producers and customers
                                                                                                5     the traditional value chain

                                                  New forms of B2B commerce,                          Cooperative consumption by groups of
                                            3     including the emergence of specialist         6     end-consumers
                                                  “horizontal” players



12
Here is a review of the six new market-                   Some new companies take this idea
making forces:                                            to its logical extreme and have
                                                          built their business models entirely
Co-production                                             on harnessing the experience of
                                                          external individuals. Marketocracy, an
More and more companies are                               investment-management and research
harnessing their customers’ ideas,                        firm, manages mutual funds based
tastes and productive powers. Danish                      on the top performers from more
toy maker Lego has launched an online                     than 100,000 model portfolios run by
customization platform—its Design                         amateur investors.17
byME site—where enthusiasts assemble
components for their own designs,                         There are strong indications that
which Lego then makes available to                        business leaders are starting to take
other customers.13 Dell launched its                      customer co-production seriously.
IdeaStorm site to tap into the ideas of                   Half of the business leaders responding
the global community of Dell users; to                    to Accenture’s survey think that
date, the company has implemented                         greater collaboration with customers
hundreds of the 12,000-plus ideas                         (for example, crowdsourcing of design
suggested at the site.14 Companies can                    or innovation) will have a significant or
also use such communities as tools                        very significant impact on competition
to reach out into the marketplace.                        in their industries over the next five
Lancashire Tea generated publicity,                       years (see Figure 7).
as well as useful input, when it asked
its fans on Facebook to help choose
its new packaging designs.15 Estée
Lauder invites bloggers to its perfume
launches to help generate online buzz
around new fragrances.16




Figure 7: Impact on competition of long-term IT-related trends

What impact will each of the following long-term IT-related trends have on competition in your industry over the next five years?


Emergence of new, faster or more flexible business
                                                                15%                                 47%                                  25%            11%    2%
processes

Greater consumer connectivity (e.g. via mobile,                      20%                                39%                             25%            11%     4%
broadband)

Greater returns from applying insights about
                                                               12%                                46%                                   27%             12%    2%
customer behavior/preferences

Growth in the bargaining power of more knowledgeable
                                                                16%                               41%                                   29%             10%   3%
consumers

Greater collaboration with customers
                                                               13%                            37%                                 29%                 17%      3%
(e.g. crowdsourcing design or innovation)

Increased ease, or lower cost, of expansion into new
                                                               9%                      35%                                  34%                       19%     3%
markets or regions

Emergence of new business models (e.g. "freemium"              13%                      30%                           27%                       22%           6%
online news, open-source software)

Increased ease, or lower cost, of market entry for new
                                                               11%                     30%                            30%                       23%           5%
players


Declining time advantage of being first to market              9%                24%                             39%                            21%           6%



                                                          0           10         20          30         40      50          60          70     80       90         100


    Very significant          Significant           Moderate           Limited          None             Don’t know




                                                                                                                                                                     13
New bridges between                       Other examples include Apple’s iPhone      These developments present
                                          apps, which provide a new revenue          particular opportunities for small
producers and customers                   stream for Apple and a creative and        companies, which can now take
Information technologies are being        entrepreneurial outlet for others,         advantage of the benefits of scale
used to enlarge markets. Two              and Amazon’s “Marketplace,” which          previously enjoyed only by large
examples: selling mobile phone            offers small businesses the chance to      businesses. Larger businesses are
banking services in rural areas of        reach large audiences while increasing     under further pressure as smaller
emerging markets, as Kuwait-based         the variety of products for sale on        rivals are increasingly able to source
mobile telecommunications company         Amazon’s site.                             standardized business services
Zain does in partnership with Citibank                                               from third-party cloud providers
in East Africa, and providing higher      Information technologies also allow        (such as Salesforce.com) with little
education online to students across       companies to serve a much wider            upfront investment and without
the world, a model that the University    variety of tastes and needs. The           having to manage an IT legacy.
of Massachusetts uses to reach            most well-known example is how
students in China.                        e-commerce is helping businesses           Consumer-to-consumer
                                          reach the “long tail” of niche
Most senior executives grasp the          markets.19 At Apple’s iTunes Store,        content
potential for disruption—and sense        for instance, consumers can purchase       Information technology has helped
the opportunity. Nearly sixty percent     more than 10 million songs across          overcome the asymmetry in knowledge
of respondents overall said that          every genre of music. Similarly,           that has traditionally given sellers
greater consumer connectivity             retailers and individuals can find large   the upper hand. In this new phase
would have a significant or very          international audiences for their often    of consumer-to-consumer (C2C)
significant impact on competition         niche wares using eBay’s marketplace.      activity, participants are sharing
in their industries over the next five                                               information in open, global online
years (see Figure 7). Interestingly,      New forms of business-to-                  forums. Initially taking the form of
the response was more emphatic                                                       reviews of products and services, this
among executives at companies
                                          business commerce
                                                                                     activity now increasingly encompasses
based primarily in emerging markets,      Historically, business-to-business (B2B)   the mobilization of communities
with 68 percent of respondents            companies supplied raw materials,          to support, discuss or take action
in those markets, compared with           semi-finished and wholesale goods and      about a product, service or project.
56 percent in developed markets,          services and, more recently, B2B grew
saying that greater consumer              to include outsourcing as companies        For example, on TripAdvisor’s
connectivity would significantly          realized the cost advantage of using       website, individuals rate and talk
affect competition in their industries    specialists to undertake more of their     about their experiences in hotels
over the next five years.                 non-core activities. Now, outsourcing      and restaurants around the world,
                                          is moving deeper into activities           shifting the balance of market
Companies can also harness value by       once considered core as technology         power from the hospitality sector
acting as intermediaries and offering     changes the cost basis of those            toward the traveler.20 The Now Smell
services that facilitate the productive   activities—and the ease and exactness      This blog brings together perfume
activities of others. InnoCentive was     with which companies can interact          enthusiasts to review scents and is
the first global Internet-based hub       with their outsourcing providers.          an opinion former in the industry.21
designed to help connect “seekers”—                                                  This is creating a fundamental change
those with challenging research           New specialized services are becoming      in the way consumers choose what
problems—with “solvers”—individuals       possible as cloud computing and            to buy as they rely increasingly
who devise creative solutions to          related technologies enable the            on information written by peers
these problems. InnoCentive itself        aggregation of small, individually         online rather than on brand history,
does not generate solutions; rather,      uneconomic pockets of demand               marketing or published specialists,
it brings together individuals,           for business services in areas such        for example in consumer reports.
companies, academic institutions          as procurement, human resources
and public-sector and non-profit          and data analysis. Amazon, known           At the same time, new IT efficiencies
organizations that collectively           for its online retail presence,            and price points are enabling
represent more than 200,000 of            now offers e-commerce and                  consumers to share more ideas and
the world's brightest minds.18            warehousing services. Li & Fung,           information. Some of this is just for
                                          previously a trading company, now          recreation or entertainment: tweets
                                          provides sophisticated procurement         of news articles or YouTube videos
                                          solutions (for more detail, see            are typical. Often, sharing takes the
                                          "Case studies: Li & Fung").                form of blogs, many of which provide
                                                                                     insight into a particular topic. They
                                                                                     range from the mainstream to the
                                                                                     niche, such as The London Review of
                                                                                     Breakfasts. These tools help individuals



14
keep their networks up to date with         Peer-to-peer markets                      Cooperative consumption
the latest trends in their areas of
interest, and can provide companies         IT has enabled the creation of            Social networking tools and other
with opportunities to tap into groups       models of international production        technology developments allow
of interested customers. However, the       based on cooperative interactions         customers to increase their bargaining
speed of dissemination of information       among individuals rather than             power further through “team buying,”
has a downside: bad news can spread         traditional sources of experience         where a group comes together online
very quickly, and there are real risks of   and trust. Witness the ascendancy         to negotiate a discount on a product
companies facing serious brand issues       of Wikipedia, or the success of           or service.
from one bad review—which might             peer-to-peer lending, especially
                                            in providing credit to areas of the       Historically, consumer cooperatives
even be written by a competitor.
                                            developing world where conventional       were organized to keep prices fair
PatientsLikeMe shows how the model          banking services are scarce.              and reduce monopolistic behavior.
of C2C dialogue has the potential                                                     As markets became broader-based
to transform the health care and            The new capabilities of IT and the        and better regulated, there was less
pharmaceutical industries. Patients         rise of the multi-polar world give        need for such models of consumption.
with complicated medical problems           more power to groups of individual        Recently, thanks to IT, the trend has
share information with others with          producers; in some cases, they remove     taken off again. Shanghai-based
similar conditions at PatientsLikeMe’s      the need for traditional intermediaries   Liba.com, founded in 2003 and selling
site, arming each other with the            or guardians of trust. Groups of like-    everything from paint to ceiling lamps,
information needed to engage in             minded individuals can now easily         had 1.6 million members within five
informed dialogue with their doctors        “cluster” to reduce their reliance on     years, with 300,000 unique visitors
and creating samples to test new            established companies and have more       a day on its site and some 30,000
therapies in large self-organized           choice over how goods and services        transactions a month during group-
standardized trials.22                      are produced. These communities are       buying events in Beijing, Shanghai,
                                            not necessarily driven by pure profit     Guangzhou and elsewhere.27
Individuals’ ability and appetite to        motives; one example is the Linux
generate and distribute their outputs,      operating system, which was created       In North America, Groupon is a young
often seemingly without a profit            and is sustained by developers working    US company performing the same
motive, is in turn rendering that output    for free using open-source software.23    function.28 It brings together offers
free at the point of consumption.                                                     of discounts from local businesses
Music, news, opinion, food recipes:         Increasingly, peer-to-peer networks       and invites members to register their
in all these areas, content sharing         provide services outside the              interest; if enough people register
threatens established business models,      boundaries of the established             on a given day, the offer comes into
as demonstrated by the growth of            corporation. For example, in online       effect. The advantages of this model
unsigned bands sharing music on             groups such as TechArena Community,       are that it focuses customers’ minds,
MySpace, the pressures faced by the         individuals seek and offer each other     lets them know exactly what they
newspaper industry, and the closure of      experience on how to operate and          are getting, and then encourages
Gourmet and other magazines.                upgrade their computers.24 Zopa.com,      interested individuals to advertise the
                                            a marketplace where individuals lend      deal to their networks. Earlier team-
Overall, C2C communities can                money to other individuals, creates       buying models were less effective
heighten consumers’ expectations of         an alternative to banks for borrowers     because they relied on waiting for a
companies, potentially reducing their       and a new form of investment for          critical mass of customers to express
ability to create or control their market   individual lenders.25 Peer-to-peer        an interest in a product before
and investor messages and changing          production is likely to extend beyond     negotiation on discounts could begin.
pricing models in a number of               the intangible world of ideas, money
industries. Many business leaders are       and information to communities that       Opportunities and
aware of the challenge: Accenture’s         produce products. Access to low-
survey reveals that 57 percent              cost production in emerging markets       challenges in the changed
of executives think the growing             continues to broaden; producing           ecosystem
bargaining power of knowledgeable           physical goods at home will be
                                                                                      While some of the new market-
consumers will significantly affect         increasingly possible with the arrival
                                                                                      making forces may still be embryonic,
competition in their industries over the    of affordable 3-D “printers”.26
                                                                                      each has substantive implications
next five years (see Figure 7). Leaders                                               for businesses. Most dramatically,
of businesses based in emerging                                                       competitors or new entrants—
markets are especially concerned,                                                     sometimes not driven by a profit
with 67 percent expressing this view,                                                 motive—can harness the new forces
compared with 52 percent from                                                         in ways that risk subverting existing
developed markets.                                                                    business models, and potentially
                                                                                      transforming whole industries. For
                                                                                      example, insurance risk assessment
                                                                                      could be upended by the combination


                                                                                                                            15
of location-based technologies,            Figure 8: Businesses see management of complex networks as the most significant
freely available neighborhood data         challenge raised by future developments in IT
and analytics software. In health          For your company, which of these business challenges will be most heightened by the impact
care, social computing may create          of IT developments over the next five years? (Select two)
new options for drug trials—as well
                                           Managing complex networks of suppliers,                                                            37%
as a growing reliance by patients          business partners and customers
on the Internet for medical advice.
Nor will government and regulation         Protecting proprietary information and data                                                  28%
be immune from these forces (see
                                           Competition for technologically and analytically
“Implications for government”).            skilled employees
                                                                                                                                      27%


Executives expect new IT-driven            Competition from new market entrants                                                    25%
business capabilities to have a major
impact on competition in their             Ability of data-rich large players to dominate
                                                                                                                                23%
                                           the market
industries over the next five years. For
                                           Diminished ability of the company to protect its
example, 62 percent of respondents         brand(s) (e.g. due to such developments as online                              18%
to Accenture’s survey thought the          consumer ratings, blogs, recommendation engines)
emergence of new, faster or more           Increasingly complex regulations for the
                                                                                                                    12%
flexible business processes would have     management of data
a significant impact on competition
                                           Increasing consumer concern over data privacy                         10%
(see Figure 7). Nearly sixty percent of
business leaders thought the same of
greater consumer connectivity, and         Insufficient Internet connectivity                                    9%
58 percent pointed to the greater
returns resulting from applying            Increasing levels of cybercrime                                    7%
insights about customer preferences.
                                           Other                                                         1%
The changed ecosystem will create
challenges, but also opportunities for     Don't know                                                   1%
achieving high performance. Among
the challenges, companies will need
to manage more complex networks
of suppliers, business partners and        Figure 9: Business leaders see IT-related opportunities to improve company performance
                                           in multiple areas
customers; protect proprietary
information and data; compete for          Which of the following IT-related opportunities do you see as most relevant to improving
technologically and analytically           your company’s performance over the next five years? (Select two)
skilled employees; and respond to          More efficient ways of working (e.g. online training,
competition from new market entrants       team collaboration across borders, office-less                                               32%
                                           companies)
(the four challenges most cited by
                                           New possibilities to collaborate with other players in
executives in our survey; see Figure 8).   the value chain
                                                                                                                                  26%


On opportunities, the business leaders     Reaching new customer groups                                                         24%
we surveyed saw potential to drive
performance across many parts of           Entering new markets                                                                 24%
the enterprise, from creating more
efficient ways of global working, and      Better sourcing and analyzing of data                                             21%
collaborating internally and externally,
to reaching new customer groups            Involvement of customers in innovation or
                                                                                                                            20%
and entering new markets (the four         production processes
opportunities most cited by executives     Customizing products and services more easily                                  18%
in our survey; see Figure 9).
                                           Sourcing of ideas through "open" or collaborative
In short, companies have the               innovation with third parties (e.g. online communities,                    15%
                                           universities, "open source" communities)
opportunity to do things differently,
harnessing the new market-making           Integrating more complex supply chains                                   12%
forces to drive high performance.
                                           Greater competition among suppliers                                 8%


                                           Other                                                        1%


                                           Don’t know                                                  0%




16
Mastering orchestration




New information technologies and            Figure 10: Few businesses are advanced in their responses to new, technology-enabled
the multi-polar world have combined         opportunities and challenges
to create turbulence in industry
                                            To what extent do you feel your company is prepared to deal with the opportunities
structures. Although business leaders       and challenges you identified?
see many opportunities and challenges
ahead, few are well prepared:               We are significantly advanced in our strategic
                                                                                                                  11%
                                            response
Accenture’s research has found that
only 11 percent of business executives      We have taken a number of steps in our strategic                                           49%
believe that their companies are            response, but still have some way to go

significantly advanced in their             We understand the implications and risks, but
                                                                                                                                 30%
strategic response (see Figure 10).         have not made significant changes to strategy yet

                                            We have yet to prepare for these issues in a
The challenge for businesses seeking        systematic way                                                     8%
to achieve high performance is to
                                            We do not feel the need to change our strategy in
move from a period of building global       response—the company is sufficiently prepared
                                                                                                         1%
connections to one in which those
connections are actively managed            Don’t know                                                   1%
in new and different ways. In the
changed ecosystem, a broader suite
of technological and geographic
options is available. Orchestrating
those connections and relationships
requires harnessing the six market-
making forces in order to realize the
potential for growth and value creation.
Public-sector organizations have similar
opportunities to deliver policy and
services more efficiently and effectively
(see “Implications for government”).




                                                                                                                                       17
Figure 11: IT is seen as critical in helping business orchestrate global operations                          previously, it would have taken seven
                                                                                                             and a half weeks to deploy them
When it comes to managing a global business, to which of the following challenges will IT most help you to   internally.31 (For more detail on Lilly’s
respond over the next five years? (Select two)                                                               strategy, see “Case studies: Eli Lilly
                                                                                                             and Company.”) In realizing these
Reaching customers globally/entering new markets                                                       50%   benefits, Lilly’s experience reflects
                                                                                                             the results of our business leader
Encouraging collaboration between employees in
different countries
                                                                                                 44%         survey: 44 percent of respondents
                                                                                                             saw IT as helping them most with
Managing an international workforce                                                  30%                     encouraging collaboration between
                                                                                                             employees; 30 percent, managing an
Harnessing innovation from overseas sources                                    22%                           international workforce (see Figure 11).

                                                                                                             In order to reach customers
Improving access to lower-cost suppliers                                   18%
                                                                                                             globally—the most common challenge
Improving the environmental sustainability of                                                                identified by business leaders (see
                                                                     11%
global operations                                                                                            Figure 11)—computer giant Dell began
                                                                                                             using Twitter. Users can sign up to
Sourcing capital globally                                           10%                                      follow Dell, receiving messages about
                                                                                                             discounted products as well as links
Improving access to natural-resource inputs                    4%                                            to purchase products or to forward
                                                                                                             the information on to others. Because
Other                                                         3%                                             of its choice to open up to consumers
                                                                                                             on Twitter, Dell saw US$3 million in
Don't know                                                     4%                                            additional sales in 2007 and 2008.
                                                                                                             In 2009, the cumulative sales figure
                                                                                                             rose to US$6.5 million, as the number
                                                                                                             of users following Dell on Twitter
                                                                                                             climbed to 1.5 million. Dell has seen
                                                                                                             some of the strongest growth in
                                                                                                             Twitter-related sales come from
                                                                                                             emerging markets, where broadband
What are the opportunities                                the quality of products and services
                                                                                                             penetration is rising and adoption
                                                          (for example, by acting upon customer
for high performance?                                     feedback on blogs), deepening
                                                                                                             of social media is strong among
                                                                                                             consumers. Dell’s Brazil operation, for
Accenture’s research has identified                       existing revenue streams (using social
                                                                                                             example, has generated US$800,000
three principal ways in which                             networks), improving collaboration
                                                                                                             in just eight months of activity
organizations are realizing                               between employees (through more
                                                                                                             through its local Twitter account.32
opportunities for achieving high                          efficient communication tools) and
performance in the changed                                reducing overhead costs (using
                                                                                                             Extension: Developing current
ecosystem: optimization, extension                        cloud computing). Moreover, the
and transformation.                                       maturation and near-ubiquity                       business in new areas
                                                          of information technologies
                                                                                                             Companies can also harness IT to
Optimization: Achieving                                   means that most businesses can
                                                                                                             extend their business models into
operational excellence in current                         very easily harness them.
                                                                                                             adjacent industries or markets. Google
business activities                                       Eli Lilly and Company, for example,                offers a good example. The company
                                                          is using cloud computing to optimize               earns the bulk of its revenues from
For most businesses, achieving
                                                          its business. With pressure growing                Internet advertising, which made
excellence in execution is a perennial
                                                          to cut fixed IT costs without                      up 97 percent of its 2008 revenues
priority. In times of recession, it is
                                                          compromising IT service levels during              of US$22 billion.33 But now, to tap
a key differentiator.29 Optimization
                                                          the recession, the pharmaceuticals                 into a new market of Web users, the
affords businesses the potential
                                                          company began working with an                      company has developed Google Wave,
to continue doing what they do,
                                                          application cloud provider to grant                a social computing platform that
just better—with lower costs and
                                                          computing capabilities to its global               will allow users to collaborate and
increased revenues. IT’s role in
                                                          network of scientists. As a result, its            communicate using richly formatted
enabling this is not in question, but
                                                          scientists can conduct more effective              text, photos, videos, maps and
cloud computing, mobile computing
                                                          and efficient molecular modeling                   more.34 Although free at the point of
and other technologies, separately
                                                          or risk-analysis calculations across               consumption, this product extends
and in combination, can push that
                                                          countries and regions.30 Lilly can                 the company’s business model by
contribution to another level. They
                                                          now have new computer servers                      getting more people to navigate its
afford new players a range of
                                                          up and running in three minutes;                   Web pages. Similarly, Google’s free
opportunities, including enhancing
                                                                                                             mobile-phone navigation service,


18
which streams live traffic updates         revenues from Safaricom’s data-              They continuously seek greater
to handsets running on its Android         services business segment (which             insight
operating system, is also envisaged        includes M-PESA, text messaging
as a future ad-supported service.35        and Internet services). Data services        To better understand their global
                                           accounted for 18 percent of                  communities of consumers and
ICICI Bank in India has used               Safaricom’s total revenues in 2008—an        stay ahead of the competition,
technology to extend its business into     increase of more than 50 percent from        companies can use analytics
adjacent geographic and IT-enabled         2007—and are likely to contribute an         technologies to drive decisions
markets—markets that were previously       even higher proportion in the future.38      and actions. Good data analysis
unreachable. In 2001, the company                                                       can help businesses understand
launched its Non Resident Indian           Smaller companies are also using IT to       and manage their performance.
(NRI) banking service, which uses          disrupt industry dynamics, developing
Web-based and wireless platforms           business models that could become            Collect the right data—with the right
to provide the Indian diaspora             the industry standards. For example,         infrastructure
community with e-banking services.         prior to Zipcar’s arrival, the choices       Forty-two percent of company
Money transfers are its core offering      for those who needed a vehicle were          executives told Accenture that
to NRIs, but the product range has         to buy, lease or rent. But Zipcar has        obtaining more and better data
evolved to include savings and deposit     established a new model: an IT-              will be a strategic priority for their
products, structured investment            enabled car-sharing service. Zipcar          organizations over the next five years
options, mortgages, insurance and          provides on-demand access to vehicles        (see Figure 12). A key to achieving
equity-linked products. ICICI has          using high-speed Internet, mobile            this is to establish the right analytical
also introduced a number of product        broadband and GPS technology. Users          infrastructure. Many companies,
variations which appeal to different       register online to reserve vehicles,         such as online DVD rental service
market segments. For example, its          and with the use of a “Zipcard,” they        Netflix, have incorporated business
“NRI Edge” is targeted at affluent         can access, unlock and lock, and             intelligence technologies from the
NRIs seeking a range of priority           return their vehicles.39 Alternatively,      outset.43 Netflix uses recommendation
services and exclusive privileges, while   customers can use a mobile app               algorithms to predict the movies its
a card-based remittance account            to find, reserve, access—or even             customers will be interested in seeing.
allows its customers to draw down          sound the horn of—a Zipcar vehicle.          Consumers’ movie recommendations
NRI money transfers at ATMs in             Customers can purchase services in           are a key to understanding their
India.36 With the NRI service serving      increments of as little as an hour.40        preferences—and ultimately a pointer
its clients as far apart as Canada and     Since the US-based company was               to the number of films they will
the Middle East, ICICI has extended        founded in 2000, it has opened offices       purchase. Netflix regularly upgrades
its business model into entirely new       in Canada and the United Kingdom.            its technology infrastructure through
geographic—and virtual—territory           While it is still relatively small, Zipcar   open-source channels.44 A recent
(for more on ICICI’s strategy, see         has 80 percent of the car-sharing            improvement to its algorithm came
“Case studies: ICICI Bank”).               market, has grown its user base to           from a dispersed team of global
                                           270,000 and expects to have 2 million        researchers based in Austria, Canada,
Transformation: Growing new                users by 2014.41 By using technology         Israel and the United States.45
business in new areas                      to work globally, this company is
                                           transforming industries: in 2009,            Create insight from the data
IT can help develop entirely               car-rental company Hertz launched its
new business models that serve                                                          Simply collecting data is not enough.
                                           own car-sharing service in Europe and        Deriving actionable insight from
markets that had previously been           North America.42
unreachable—or even unimagined.                                                         the data is the critical next step.
It can also help reshape industry                                                       Indeed, Accenture’s research shows
dynamics by setting new standards
                                           The instruments of                           that it is becoming more important
that others have to follow.                orchestration                                to develop better data-analysis
                                                                                        capabilities. Thirty-nine percent of
                                           How can businesses set about                 the business leaders we surveyed
Safaricom, a mobile network operator
                                           realizing the opportunities presented        expect that investing in better data-
in Kenya, is using IT to develop a
                                           by the changed ecosystem? What               analysis capabilities will form a part
new business model and tap into a
                                           are the capabilities they can develop        of their strategies for responding to
new market. The company’s M-PESA
                                           to position themselves for effective         the emerging challenges—such as
service, launched in 2007, offers
                                           global orchestration and high                greater competition from data-rich
customers a way to transfer money
                                           performance? Accenture’s research            companies—over the next five years
anywhere in the country or to make
                                           has identified two broad hallmarks           (see Figure 12).
payments—for instance, school fees
                                           of success that will be increasingly
and taxi fares.37 Essentially, Safaricom
                                           important to underpinning a
has transformed its business model
                                           company’s competitive performance:
by serving an entirely new market
                                           first, relentlessly gathering, analyzing
in Kenya: mobile banking. In 2008,
                                           and using data; and second, developing
the increase in demand for M-PESA
                                           a broader network of relationships
contributed to a 94 percent rise in
                                           with stakeholders.
                                                                                                                              19
Accenture From Global Connection To Global Orchestration
Accenture From Global Connection To Global Orchestration
Accenture From Global Connection To Global Orchestration
Accenture From Global Connection To Global Orchestration
Accenture From Global Connection To Global Orchestration
Accenture From Global Connection To Global Orchestration
Accenture From Global Connection To Global Orchestration
Accenture From Global Connection To Global Orchestration
Accenture From Global Connection To Global Orchestration
Accenture From Global Connection To Global Orchestration
Accenture From Global Connection To Global Orchestration
Accenture From Global Connection To Global Orchestration
Accenture From Global Connection To Global Orchestration
Accenture From Global Connection To Global Orchestration
Accenture From Global Connection To Global Orchestration

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Accenture From Global Connection To Global Orchestration

  • 1. From global connection to global orchestration Future business models for high performance where technology and the multi-polar world meet
  • 2. Contents Foreword ................................................................... 1 Executive summary................................................ 2 Methodology............................................................ 5 The multi-polar world ........................................... 6 After the storm: Two defining trends of the next era ................. 8 The new market-making forces ......................... 12 Mastering orchestration ....................................... 17 Implications for government .............................. 22 Last word .................................................................. 24 Case studies ............................................................. 25 Sources ...................................................................... 30
  • 3. Foreword Ten years ago, the world entered a period in which globalization would come of age. It was to be an evolution the new market-making forces at work. For companies and markets, the implications of these forces, even in both substance and form. The in embryonic form, are profound. rise of emerging markets planted new economic flags, diffusing and Organizations have a great rebalancing economic power across opportunity to harness these forces ever more countries and regions. to their advantage to optimize, extend At the same time, globalization or even transform their business morphed from being a chiefly one- models. Locating and orchestrating way phenomenon—with exports and the right global connections outside labor flowing from East to West— the organization become, perhaps into an indisputably multidirectional paradoxically, the key to achieving an and interdependent contest for ever closer focus on the competitive consumers, resources, capital, talent essence of the business. Excellence and innovation. The economic map in networks, relationships and data- became truly multi-polar, the world driven insight will be required. Some larger in geographic scope yet smaller of the necessary responses may seem in economic distance. counterintuitive. Throwing open Mark Foster the doors of the company will not The past two years, though, will be come naturally. Broadening the field Group Chief Executive remembered less for trends than for of dialogue takes time and effort; events. The attention of business customer insight requires work. Yet Global Markets and and political leaders everywhere was these investments will help define Management Consulting rightly absorbed by combating the competitive advantage for the future. worst effects of the financial crisis and economic downturn. Now, as Accenture’s multi-polar world research the dust thrown up by the global program was launched in 2006 to downturn begins to settle, business help companies and public-sector leaders and policymakers are starting organizations striving to achieve to focus once more on the longer- high performance respond to the term influences shaping tomorrow’s changes in the world’s economies. economy. The advent of a new decade Our aspiration for this report, the is a natural time to take stock of fourth in the series, is that it will the interplay of the forces in global spur organizations to move beyond economics and their implications for straightforward connectedness toward business and government. an effective global orchestration of powerful new economic possibilities Two trends that feature prominently that increasingly lie beyond the in my conversations with business traditional frontiers of the enterprise and government leaders are and fully harness the potential of the acceleration of multi-polar pervasive new technology waves. globalization and the transformative potential of newly mature information technologies—including cloud, mobile and collaborative computing. These two trends have not only continued apace during the downturn, but have drawn added strength and speed from it, spurred by the intensifying quest for Mark Foster efficiency, competitiveness and new Group Chief Executive customers across the world. Global Markets and Less well known is how IT and the Management Consulting multi-polar world are also enabling individuals and enterprises to connect and communicate in order to create value in new and different ways. Our research has sought to look beyond the daily headlines about social networking, blogging and crowd- sourcing to reveal and understand 1
  • 4. Executive summary After the storm: two of emerging-market companies in the By reducing barriers—such as access Fortune Global 500—a leading ranking to markets, upfront investment, defining trends for the of the world’s largest companies—has and economies of scale—IT and the next era risen from 20 in 1995 to 91 in 2009. multi-polar world are intensifying competition. New entrants from As the world emerges from a period At the same time, a number of emerging markets, free of legacy of economic torpor, attention is information technologies are maturing. systems and processes, can access refocusing on two long-term trends The levels of access, cost, standards, pay-per-use business infrastructure. whose continued rise has been openness, reliability and ease of use Niche players anywhere in the world obscured by the recent turmoil: of both hardware and communication can build competitive cost bases the changing shape of globalization capabilities have developed to the and cut new paths to market. New and the maturing of information point at which software can be readily consumers, better connected and technology (IT). used to combine them to newly better informed than ever, are entering powerful effect in business and social the global marketplace. The rise of a multi-polar world settings. The coming together of cloud economy—in which economic power services, collaborative computing, and activity are increasingly diffused mobile communications and other across geographic borders—continues technologies creates new options for apace. The recovery now under businesses in all regions. In particular, way is demonstrating the resilience in responding to and reinforcing of emerging markets. Developing growth in emerging markets, IT adds economies already account for more weight to the shift toward economic than half of world output. They multi-polarity. have not only weathered the crisis better than developed economies, but they are also helping to power the global recovery, generating the bulk of expected growth in the global economy in 2010. The confident rise of emerging economies is mirrored in the corporate arena. Indeed, the number 2
  • 5. Six new market-making • New businesses that use IT • Technology is unleashing consumer- to build new bridges between to-consumer content as like-minded forces producers and customers are individuals share information and Yet it is not simply a story of emerging. From rural banking to opinion about products and services— competition becoming more intense: collaborative apps platforms, these often in an open and global forum competition itself is changing. The intermediary players are harnessing where the objective is not profit, intertwining of IT and the multi-polar new technology to make markets but an increase in the knowledge or world has made a number of new in places where geographic or economic welfare of participants. economic relationships possible for the economic distance had previously Shifting market power away from first time. This sets the stage for doing held supply and demand apart. producers toward consumers, this business in completely new ways—not force has implications for reputation, • Changes in the capability, reach by simply connecting across the multi- quality, the meaning of brand and, and cost of IT are enabling new forms polar world but by orchestrating the where content can be digitized, for the of business-to-business commerce. six new market-making forces that survival of entire industries. Thanks to cloud computing and the Accenture's research identified: myriad business models it and other • IT is allowing consumers to • Co-production between companies technologies make possible, even participate in peer-to-peer markets and their customers or suppliers is for niche providers, companies have for the cooperative production of blurring traditional boundaries within greater access—fast, across borders, goods and services in tandem with industry value chains. Innovation and and often at variable cost—to efficient other consumers. Often driven by a product design are two areas in which and industrialized functions to support desire to unlock new efficiency or enterprises are using new technologies a more focused core. effectiveness in a product or service, to tap into the collaborative input peer-to-peer players can quickly of a growing number of stakeholders open up new market space while also around the world. reducing the power of alternative providers. For example, international peer-to-peer microfinance platforms are challenging assumptions about lending to small entrepreneurs in high- growth economies. 3
  • 6. • Individuals are collaborating Optimization: Achieving operational Second, they develop deep and electronically to engage in cooperative excellence in current business wide networks with consumers, consumption. Social computing can activities. New information entrepreneurs and other businesses. make it easy for consumers to signal and collaboration tools can By opening themselves up to the their group buying intentions—and also enhance the quality of products ecosystem, high-performance to increase that collective bargaining and services, improve customer businesses will draw strength beyond power by advertising the offer and service and reduce costs. the sum of their parts. By connecting enlarging the cluster of committed to consumers through social Extension: Developing current customers. This “team buying” alters computing and advanced analytics, business in new areas. Companies the dynamics of discounting and of they will undertake an open dialogue can harness new technologies product tailoring. that directs product and service to extend existing business enhancement while building loyalty. By These new market-making forces, models into additional, or opening up to external entrepreneurs and the full range of IT developments completely new, industries. and businesses, they can co-opt the they draw on, have big implications. Transformation: Growing new experience and capabilities of others Businesses will have to operate in a business in new areas. Companies can to develop new, innovative solutions much more complex ecosystem, where deploy IT to build new business models at low cost. And by divesting some customers, suppliers, competitors for entry into previously unreachable— in-house functions to external service and other producers are increasingly or even unimagined—markets. providers, such as cloud owners and interconnected and interdependent. horizontal service providers, they can The new forces heighten a number The instruments of increase efficiency and reduce costs. of business challenges, including the management of networks of orchestration third parties, competition from new Orchestrating market-making forces market entrants, and the protection of is a complex undertaking. It requires proprietary information and data. They an understanding of how these forces also present significant opportunities are spawning new business models. that were not previously available, For the majority of businesses, the including working more efficiently, question will be: where to start? collaborating in new ways with Our research has identified two business partners, and reaching new hallmarks of success that will be markets or customer groups. increasingly important to underpinning a company’s competitive performance. In the government sphere, too, the Understanding these practices offers a market-making forces offer an guide to businesses seeking to emulate opportunity to improve public-service and excel against the competition. value and policy effectiveness, as well as the prospect of innovative solutions First, they actively seek greater to social challenges—ranging from insight. Tomorrow’s high-performance energy usage to security—within and businesses will exhibit unusually high across national borders. levels of business intelligence, putting in place infrastructure with which they Mastering orchestration can constantly amass and analyze data to glean valuable insight. Their Strikingly, only 11 percent of business leaders will regularly communicate leaders we surveyed believe that the importance of round-the-clock their companies are significantly alertness, displaying advanced advanced in their strategic response levels of awareness themselves to the disruptive business environment and gearing their organizations’ brought about by the intersection talent-development programs of the multi-polar world and accordingly. In an age when open- developments in IT. For businesses source information services have looking to harness the changed made everyone an "expert," there is ecosystem to their advantage, the enormous potential for competitive imperative is to move beyond global advantage by employing advanced connectedness toward a more tools for capturing data and analyzing proactive, continuously managed it to produce rich, timely, actionable global orchestration of the new insights. A passion for data-driven market-making forces that are now continuous improvement will become available. A number of businesses, a fundamental tenet of a high- both traditional and new, are already performance organization’s culture. doing so to unlock core business improvement in three areas: 4
  • 7. Methodology This report is based on two major The 420 survey participants are all The respondents’ companies represent strands of research. First, we analyzed senior business leaders. Close to one- a wide range of annual revenues, the interaction between information third (32 percent) are chief executives, from less than US$50 million technologies and globalization, drawing presidents or managing directors; (32 percent of respondents) to on a range of secondary data sources, 30 percent are other C-level more than US$10 billion (18 percent our extensive experience working executives; and 30 percent are senior of respondents). More than half of with clients in each of these areas vice presidents, vice presidents the respondents (54 percent) work and the groundbreaking work of the or directors. Respondents are for companies that have been in Accenture Technology Labs. Second, distributed across 30 industry business for more than 20 years. we commissioned the Economist sectors, including financial services, Intelligence Unit (EIU) to conduct a electronics, high technology, survey to identify how companies consumer goods, professional are evaluating and responding services, chemicals, energy, utilities, to developments in information telecommunications, automotive, technology and globalization. retail, and media & entertainment. The fieldwork for the EIU survey was Thirty-one percent of respondents are conducted in October and November from companies primarily based in the 2009. The survey asked respondents Asia-Pacific region: 30 percent are which global developments and IT- from North America; and 26 percent related trends would have the greatest are from Western Europe. Other impact on the business environment, respondents come from the Middle which IT-related opportunities and East, Africa, Latin America and Eastern threats their companies faced and Europe. Approximately one-third of what strategies they were planning companies have physical operations to implement in response to those in more than 20 countries, while 18 opportunities and threats. percent have physical operations only in their home markets. 5
  • 8. The multi-polar world Accenture uses the term “multi-polar world—new consumers, talent, Talent world” to describe the diffusion innovation, resource sustainability, While many Western economies of global economic power across and capital—that multinational are grappling with the effects of a widening range of regions and businesses can harness for short-term contracting workforces and shortages countries, with that diffusion flexibility and long-term growth. of specialized skills, emerging- accelerated by information technology, These dimensions, which span market workforces are set to expand greater economic openness, and emerging and developed economies, dramatically. In the decade to 2020, the growing size and reach of constitute the arena in which the working-age population of multinational companies. companies now need to compete. emerging economies is expected to increase by more than 500 million, While many of the new poles of New consumers compared with an increase of only economic activity are in the “Big 6” Many emerging markets continue 3.7 million in developed economies.1 emerging economies—Brazil, China, to enjoy impressive growth in India, Mexico, Russia and South consumer spending, bolstered by Innovation Korea—increasingly they include long-term fundamentals such as Innovation is no longer the exclusive next-wave locations such as Egypt, population growth, rising incomes province of developed markets. Nigeria and Turkey. Together with the and an emerging middle class of A combination of investment, more-established centers of economic consumers who aspire to developed- education and a strategic policy activity, these rapidly emerging world standards of living. IT offers focus on new technologies has economies are radically reshaping businesses new ways to reach and spurred the development of new the economic geography in which serve these emerging customers clusters of innovation in emerging businesses must operate. and to craft innovative business economies. Witness the rise of models that uncover otherwise nanotechnologies and biotech in Accenture first explored the latent pools of demand. Beijing, digital media and genomics characteristics and drivers of in Seoul, biofuels in Brazil and this new phase of globalization automotive technologies in Poland. in its 2007 study, The Rise of the Multi-Polar World. In that study Accenture identified five increasingly competitive and interdependent dimensions to the multi-polar 6
  • 9. Resource sustainability The canvas of the multi-polar world and consistently different ways. In Because of global commodity also features a large and increasingly particular, the findings showed that markets and optimized supply chains, diverse cast of public and private companies need to: companies feel the effects of volatility players operating alongside and Create geographic options— in prices or supply movements more competing with traditional, developed- proactively and continually look quickly than ever. At the same time, market multinationals. Chief among outward to sense their environment they face the prospect of a world with these are the emerging-market and make focused choices about where dwindling fossil-fuel resources—and multinationals, which have become to compete and whom to engage. increasing obligations to preserve increasingly prominent as they natural resources. The challenge is expand their international activities. Be authentically local—embed to find the right balance of supply These companies were the subject of themselves with full commitment in security, price stability, efficiency Accenture’s second multi-polar world their chosen markets, weaving their gains and environmental sustainability. study, in 2008, titled The Rise of the operations into the fabric of local Emerging-Market Multinational. business and society. Capital In the third multi-polar world study, Network the organization—create Pools of capital are increasingly visible in 2009, titled Strategies for achieving organizations that are permeable, both in the emerging world—not only in high performance in a multi-polar internally and externally, enabling nascent capital markets but also world: Global choices for global flows of ideas, people and industry via new players such as emerging- challenges, Accenture studied how leading practices to the right places at market multinationals and sovereign high-performance businesses had the right time. wealth funds. With approximately US$3.9 trillion in assets under been evolving their strategies in management in 2008, sovereign response to the multi-polar world. wealth funds—state-backed entities The research found that high- that invest surplus foreign reserves performance businesses conceive of overseas—dwarf private equity and and execute their strategies in new could reach US$8 trillion by 2015, according to some estimates.2 7
  • 10. After the storm: Two defining trends of the next era When the dust created by the The shift to a multi-polar • Emerging markets are expected to recession has settled, it may not be generate the bulk of the growth in the an exaggeration to view multi-polar world is accelerating world economy in 2010;4 globalization and new information For some time now, businesses have • Emerging markets attract a larger technology developments as the two found themselves operating in a share of foreign direct investment defining trends of the era ahead. world where economic power and than developed markets, and drive Powerful individually, each augments possibility are increasingly diffused an increasing share of outward and enhances the other. Their interplay across geographic borders, especially investment flows;5 and is setting the stage for substantial to emerging markets—a process that changes in how businesses see and Accenture terms the rise of the multi- • The six largest emerging economies interact with the world around polar world (see “The multi-polar (the “B6”)—Brazil, China, India, Mexico, them—in how they orchestrate their world”). In the depths of the downturn, Russia and South Korea—are on a path interactions with other entities rather it was easy to wonder whether this to grow by 5.1 percent in 2010.6 than simply connecting with them. shift to emerging markets had stalled. Levels of risk aversion rose sharply and This rebalancing of economic activity Among business leaders worldwide, investors and businesses withdrew features not only the B6; it is evident there is a palpable sense that capital, often to shore up core also in the next wave of emerging significant change is afoot. Forty-one businesses at home. But the nascent economies, among them Indonesia, percent of executives believe new recovery is now demonstrating the Malaysia, Nigeria, Thailand and Turkey. players from emerging markets to be resilience of emerging markets. Much of this growth results from one of the two developments that Developing economies have not only emerging-market businesses that have will have the most impact on business weathered the crisis better than continued their onward march amid over the next five years, according to developed economies, but they are also global recession. Indeed, the number Accenture’s survey; 35 percent pointed helping to power the global recovery: of emerging-market companies in the to new technology capabilities Fortune Global 500—a leading ranking (see Figure 1). • In 2009, for the first time, emerging of the world’s largest companies—has markets accounted for half of the more than quadrupled in less than global economy;3 15 years, from 20 in 1995 to 91 in 2009.7 8
  • 11. Figure 1: Trends in emerging markets and new information technologies are the most- cited developments impacting businesses over the next five years In your view, which two of the following developments will have the most significant impact on your business over the next five years? (Select two) Growth in size and reach of new players from 41% emerging markets Increase in the capabilities of new information 35% technologies Slower economic growth in developed markets 27% Emergence of a changed corporate finance 24% landscape Greater involvement of government in 23% markets/business Greater access to customers globally 20% Greater access to inputs (resources, talent, ideas) 12% from international markets Climate change and the policy/regulatory 12% responses to it Rising security threats 5% Emerging-market companies have While the multi-polar world increases Software has been the essential tended to fare well during the the scale of the business landscape catalyst in this revolution. It has recession, partly owing to strong local and introduces new competitors, brought together hardware and growth but also to highly competitive developments in IT are creating new connective infrastructure to apply cost structures and a long history of connections and new possibilities technologies to real-world problems, serving customers at low (or multiple) for businesses to achieve high needs and wants—both in business price points. For example, Indian performance around the globe. and social spheres. Businesses conglomerate Godrej has created are now increasingly using a wide a new type of refrigerator priced The continuing IT revolution variety of newer technologies between US$65 and US$75; using to meet their objectives. These solid-state technology instead of a While the attention of policymakers range from pure hardware such compressor, the unit is lightweight and business leaders has been focused as cloud-based servers or remote and can cool 30 liters of food.8 on the biggest economic upheaval of sensors, and communications Similarly, China’s Zhongxing Medical the past 50 years, the rapid march of technologies such as mobile and has transformed the domestic information technologies has gone broadband, to complex software- radiography market in the past largely unnoticed. During this time, driven technologies such as social decade by creating a technology that information technologies have reached computing and advanced analytics. renders X-ray images in digital form, new levels of maturation in terms of bypassing the traditional lengthy access, cost, openness, standards, Yet IT can be only as relevant as the and expensive chemical process. By reliability and usability. This is true content it holds, transmits or serves 2009, the company had a 50 percent both of IT hardware—including servers, up. This period of IT maturation share of the Chinese market—despite PCs, smartphones and sensors—and coincides with increasing levels 40 percent price cuts by developed- of communication technologies, with of digitization—the availability of market competitors.9 mobile and broadband connectivity content in electronic form. Not only nearly ubiquitous in the developed are books, music and news all online, world and increasingly common across but increasingly so are taxes, medical much of the developing world. records and bank deposits. And in the future, remote sensors will allow a raft of physical objects to interact with people—and each other. 9
  • 12. Figure 2: New developments and capabilities in IT Remote sensors—These create new ways to track goods across the supply chain and to obtain information about product usage. Predicting They are an important element in information the development of “smart grids” that integrate households and power grids in ways that increase energy efficiency and reduce energy use. Analytics Advanced analytics—This is the Moving Analyzing information information extensive use of data, statistical Collaborative analysis, explanatory and predictive computing models, and fact-based management Mobile tools to drive decisions and actions.10 Businesses can harvest Cloud computing greater insight and competitive advantage from the mass of data Sensors accumulated in the course of IT developments producing and selling to customers or operating plants and equipment. Sensing Processing information IT capabilities information These developments in IT are not only changing the options available to businesses, but are also accelerating the move toward a multi-polar world. IT-powered multi-polarity IT continues to make the world feel smaller to organizations. As the availability, affordability and The business impact of a client process clouds. The emergence power of IT continue to increase, selection of current technologies of cloud providers serving many geographic distance becomes less different companies will promote relevant for today’s multinationals. So what will the transformation in the greater standardization and Bangalore can be as convenient power of information technologies industrialization of business processes, as Boston, Seoul as accessible as mean for business? Earlier phases yielding significant scale efficiencies Seattle. Cost-effective and powerful of the IT revolution enabled us to and allowing the optimization of IT IT makes it possible to closely monitor move and process information, functions across the entire cloud. a manufacturing plant in Vietnam or powered by computer processing to track components across a global cycles, dependable and sophisticated Collaborative (social) computing— supply chain. The Internet instantly software, and networking capabilities. This encompasses a wide variety of links suppliers directly to billions of Recent developments are enabling IT technology tools that allow real-time potential customers across the world. to sense, analyze and even predict networking and collaboration among The growing global middle class, information, creating new capabilities users, both at home and increasingly more and more reachable through in the generation and application of in the workplace. It facilitates the the Internet and mobile phones, business insight (see Figure 2). creation of online communities of offers businesses the prospect of interest that companies can tap into reaching millions of new consumers Cloud computing—This provides to source ideas, test products and with greater discretionary spending businesses with access to computing services, and market new offerings. power (see Figures 3, 4 and 5). power, software and process Mobile technology, in particular, has management functions from a remote Advances in mobile technologies— been crucial in increasing access third-party provider, enabling them These technologies are now coming to markets, particularly among the to pay “per use” and avoid the need into their own, not just for personal world’s poorest. Mobile phones, for to own significant infrastructure communication, but also for remote example, allow farmers to access themselves. Types of cloud services telemetry. Mobile technologies allow live market prices for their produce, include IT infrastructure (access to businesses to reach customers at any and they bring banking services to hardware and servers), platforms time wherever they are, tailor services remote areas for the first time. A (development environments for to the customer’s exact location and recent Accenture survey of consumers applications), applications (accessed sell to previously unreachable markets. revealed that those in emerging through Web browsers) and multi- markets are more than twice as 10
  • 13. likely as those in developed markets Figure 3: Growth in Internet connectivity to buy and use consumer IT—such Percentage of the population using the Internet as Web-enabled mobile phones, 80 smartphones and netbooks—in 2010.11 Advances in IT also allow 70 companies to access the increasingly 60 sophisticated workforces of the 50 emerging world, meaning that ever- more-complex tasks can be carried 40 out across virtual global networks. 30 The new capabilities of IT have 20 the potential to benefit the 10 competitiveness of emerging-market multinationals. Using IT, they can 0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 leapfrog to create cheaper, more Developed economies Emerging economies flexible business processes without the concerns of legacy IT that confront Source: International Telecommunications Union, 2009; Accenture analysis their developed-market counterparts. It is no wonder that, between 2010 and 2013, IT spending is forecast to Figure 4: Growth in use of mobile telephones grow 5.8 percent per year in emerging Total number of mobile cellular subscriptions in the world (in billions) markets compared with 3.6 percent in 4.5 developed markets.12 4.0 IT and the multi-polar world 3.5 have enlarged the business 3.0 ecosystem 2.5 77% 2.0 74% Taken together, the rise of the multi- 71% polar world and the maturation of IT 1.5 67% are changing the nature of competition 62% 1.0 57% 53% and the nature of stakeholder 41% 47% 0.5 36% 33% 29% 26% 23% interactions. The ecosystem in which 59% 53% 47% 43% 38% 64% businesses have traditionally operated 0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 has enlarged and become more Developed economies Emerging economies complex: more competition, more stakeholders, more customers, spread Source: International Telecommunications Union, 2009 across more geographic boundaries. As the following chapter explains, the two trends are also combining to Figure 5: Growth of the middle class generate new ways of creating value Number of households (in millions) with annual incomes greater than US$5,000 among stakeholders—with important (at constant prices and at purchasing power parity) consequences for businesses. 800 700 600 500 400 300 200 100 0 1999 2004 2009 2014f Developed economies Emerging economies Source: EIU 11
  • 14. The new market-making forces The business ecosystem is now Figure 6: A perspective of ecosystem disruption populated by more stakeholders and competitors, complicating the terrain 6a. Traditional view of the business ecosystem for companies around the world. However, a further reality is dawning: the nature of competition itself is B2B B2C End-consumers changing. Accenture has identified companies companies how the intertwining of IT maturation and the rise of the multi-polar world are generating six forces that are creating new market potential 6b. New market-making forces are creating a more complex business ecosystem (see Figure 6). These forces are leading to novel configurations of capital, talent and resources that open up 1 1 4 B2B B2C more efficient forms of production; companies companies End-consumers unlock new products and services; introduce new business models; and 3 6 5 open more components of the value 2 2 2 chain to collaborative execution. Intermediaries Co-production between firms and Consumer-to-consumer content sharing 1 their customers and suppliers 4 Using IT to create new bridges Peer-to-peer markets operating outside 2 between producers and customers 5 the traditional value chain New forms of B2B commerce, Cooperative consumption by groups of 3 including the emergence of specialist 6 end-consumers “horizontal” players 12
  • 15. Here is a review of the six new market- Some new companies take this idea making forces: to its logical extreme and have built their business models entirely Co-production on harnessing the experience of external individuals. Marketocracy, an More and more companies are investment-management and research harnessing their customers’ ideas, firm, manages mutual funds based tastes and productive powers. Danish on the top performers from more toy maker Lego has launched an online than 100,000 model portfolios run by customization platform—its Design amateur investors.17 byME site—where enthusiasts assemble components for their own designs, There are strong indications that which Lego then makes available to business leaders are starting to take other customers.13 Dell launched its customer co-production seriously. IdeaStorm site to tap into the ideas of Half of the business leaders responding the global community of Dell users; to to Accenture’s survey think that date, the company has implemented greater collaboration with customers hundreds of the 12,000-plus ideas (for example, crowdsourcing of design suggested at the site.14 Companies can or innovation) will have a significant or also use such communities as tools very significant impact on competition to reach out into the marketplace. in their industries over the next five Lancashire Tea generated publicity, years (see Figure 7). as well as useful input, when it asked its fans on Facebook to help choose its new packaging designs.15 Estée Lauder invites bloggers to its perfume launches to help generate online buzz around new fragrances.16 Figure 7: Impact on competition of long-term IT-related trends What impact will each of the following long-term IT-related trends have on competition in your industry over the next five years? Emergence of new, faster or more flexible business 15% 47% 25% 11% 2% processes Greater consumer connectivity (e.g. via mobile, 20% 39% 25% 11% 4% broadband) Greater returns from applying insights about 12% 46% 27% 12% 2% customer behavior/preferences Growth in the bargaining power of more knowledgeable 16% 41% 29% 10% 3% consumers Greater collaboration with customers 13% 37% 29% 17% 3% (e.g. crowdsourcing design or innovation) Increased ease, or lower cost, of expansion into new 9% 35% 34% 19% 3% markets or regions Emergence of new business models (e.g. "freemium" 13% 30% 27% 22% 6% online news, open-source software) Increased ease, or lower cost, of market entry for new 11% 30% 30% 23% 5% players Declining time advantage of being first to market 9% 24% 39% 21% 6% 0 10 20 30 40 50 60 70 80 90 100 Very significant Significant Moderate Limited None Don’t know 13
  • 16. New bridges between Other examples include Apple’s iPhone These developments present apps, which provide a new revenue particular opportunities for small producers and customers stream for Apple and a creative and companies, which can now take Information technologies are being entrepreneurial outlet for others, advantage of the benefits of scale used to enlarge markets. Two and Amazon’s “Marketplace,” which previously enjoyed only by large examples: selling mobile phone offers small businesses the chance to businesses. Larger businesses are banking services in rural areas of reach large audiences while increasing under further pressure as smaller emerging markets, as Kuwait-based the variety of products for sale on rivals are increasingly able to source mobile telecommunications company Amazon’s site. standardized business services Zain does in partnership with Citibank from third-party cloud providers in East Africa, and providing higher Information technologies also allow (such as Salesforce.com) with little education online to students across companies to serve a much wider upfront investment and without the world, a model that the University variety of tastes and needs. The having to manage an IT legacy. of Massachusetts uses to reach most well-known example is how students in China. e-commerce is helping businesses Consumer-to-consumer reach the “long tail” of niche Most senior executives grasp the markets.19 At Apple’s iTunes Store, content potential for disruption—and sense for instance, consumers can purchase Information technology has helped the opportunity. Nearly sixty percent more than 10 million songs across overcome the asymmetry in knowledge of respondents overall said that every genre of music. Similarly, that has traditionally given sellers greater consumer connectivity retailers and individuals can find large the upper hand. In this new phase would have a significant or very international audiences for their often of consumer-to-consumer (C2C) significant impact on competition niche wares using eBay’s marketplace. activity, participants are sharing in their industries over the next five information in open, global online years (see Figure 7). Interestingly, New forms of business-to- forums. Initially taking the form of the response was more emphatic reviews of products and services, this among executives at companies business commerce activity now increasingly encompasses based primarily in emerging markets, Historically, business-to-business (B2B) the mobilization of communities with 68 percent of respondents companies supplied raw materials, to support, discuss or take action in those markets, compared with semi-finished and wholesale goods and about a product, service or project. 56 percent in developed markets, services and, more recently, B2B grew saying that greater consumer to include outsourcing as companies For example, on TripAdvisor’s connectivity would significantly realized the cost advantage of using website, individuals rate and talk affect competition in their industries specialists to undertake more of their about their experiences in hotels over the next five years. non-core activities. Now, outsourcing and restaurants around the world, is moving deeper into activities shifting the balance of market Companies can also harness value by once considered core as technology power from the hospitality sector acting as intermediaries and offering changes the cost basis of those toward the traveler.20 The Now Smell services that facilitate the productive activities—and the ease and exactness This blog brings together perfume activities of others. InnoCentive was with which companies can interact enthusiasts to review scents and is the first global Internet-based hub with their outsourcing providers. an opinion former in the industry.21 designed to help connect “seekers”— This is creating a fundamental change those with challenging research New specialized services are becoming in the way consumers choose what problems—with “solvers”—individuals possible as cloud computing and to buy as they rely increasingly who devise creative solutions to related technologies enable the on information written by peers these problems. InnoCentive itself aggregation of small, individually online rather than on brand history, does not generate solutions; rather, uneconomic pockets of demand marketing or published specialists, it brings together individuals, for business services in areas such for example in consumer reports. companies, academic institutions as procurement, human resources and public-sector and non-profit and data analysis. Amazon, known At the same time, new IT efficiencies organizations that collectively for its online retail presence, and price points are enabling represent more than 200,000 of now offers e-commerce and consumers to share more ideas and the world's brightest minds.18 warehousing services. Li & Fung, information. Some of this is just for previously a trading company, now recreation or entertainment: tweets provides sophisticated procurement of news articles or YouTube videos solutions (for more detail, see are typical. Often, sharing takes the "Case studies: Li & Fung"). form of blogs, many of which provide insight into a particular topic. They range from the mainstream to the niche, such as The London Review of Breakfasts. These tools help individuals 14
  • 17. keep their networks up to date with Peer-to-peer markets Cooperative consumption the latest trends in their areas of interest, and can provide companies IT has enabled the creation of Social networking tools and other with opportunities to tap into groups models of international production technology developments allow of interested customers. However, the based on cooperative interactions customers to increase their bargaining speed of dissemination of information among individuals rather than power further through “team buying,” has a downside: bad news can spread traditional sources of experience where a group comes together online very quickly, and there are real risks of and trust. Witness the ascendancy to negotiate a discount on a product companies facing serious brand issues of Wikipedia, or the success of or service. from one bad review—which might peer-to-peer lending, especially in providing credit to areas of the Historically, consumer cooperatives even be written by a competitor. developing world where conventional were organized to keep prices fair PatientsLikeMe shows how the model banking services are scarce. and reduce monopolistic behavior. of C2C dialogue has the potential As markets became broader-based to transform the health care and The new capabilities of IT and the and better regulated, there was less pharmaceutical industries. Patients rise of the multi-polar world give need for such models of consumption. with complicated medical problems more power to groups of individual Recently, thanks to IT, the trend has share information with others with producers; in some cases, they remove taken off again. Shanghai-based similar conditions at PatientsLikeMe’s the need for traditional intermediaries Liba.com, founded in 2003 and selling site, arming each other with the or guardians of trust. Groups of like- everything from paint to ceiling lamps, information needed to engage in minded individuals can now easily had 1.6 million members within five informed dialogue with their doctors “cluster” to reduce their reliance on years, with 300,000 unique visitors and creating samples to test new established companies and have more a day on its site and some 30,000 therapies in large self-organized choice over how goods and services transactions a month during group- standardized trials.22 are produced. These communities are buying events in Beijing, Shanghai, not necessarily driven by pure profit Guangzhou and elsewhere.27 Individuals’ ability and appetite to motives; one example is the Linux generate and distribute their outputs, operating system, which was created In North America, Groupon is a young often seemingly without a profit and is sustained by developers working US company performing the same motive, is in turn rendering that output for free using open-source software.23 function.28 It brings together offers free at the point of consumption. of discounts from local businesses Music, news, opinion, food recipes: Increasingly, peer-to-peer networks and invites members to register their in all these areas, content sharing provide services outside the interest; if enough people register threatens established business models, boundaries of the established on a given day, the offer comes into as demonstrated by the growth of corporation. For example, in online effect. The advantages of this model unsigned bands sharing music on groups such as TechArena Community, are that it focuses customers’ minds, MySpace, the pressures faced by the individuals seek and offer each other lets them know exactly what they newspaper industry, and the closure of experience on how to operate and are getting, and then encourages Gourmet and other magazines. upgrade their computers.24 Zopa.com, interested individuals to advertise the a marketplace where individuals lend deal to their networks. Earlier team- Overall, C2C communities can money to other individuals, creates buying models were less effective heighten consumers’ expectations of an alternative to banks for borrowers because they relied on waiting for a companies, potentially reducing their and a new form of investment for critical mass of customers to express ability to create or control their market individual lenders.25 Peer-to-peer an interest in a product before and investor messages and changing production is likely to extend beyond negotiation on discounts could begin. pricing models in a number of the intangible world of ideas, money industries. Many business leaders are and information to communities that Opportunities and aware of the challenge: Accenture’s produce products. Access to low- survey reveals that 57 percent cost production in emerging markets challenges in the changed of executives think the growing continues to broaden; producing ecosystem bargaining power of knowledgeable physical goods at home will be While some of the new market- consumers will significantly affect increasingly possible with the arrival making forces may still be embryonic, competition in their industries over the of affordable 3-D “printers”.26 each has substantive implications next five years (see Figure 7). Leaders for businesses. Most dramatically, of businesses based in emerging competitors or new entrants— markets are especially concerned, sometimes not driven by a profit with 67 percent expressing this view, motive—can harness the new forces compared with 52 percent from in ways that risk subverting existing developed markets. business models, and potentially transforming whole industries. For example, insurance risk assessment could be upended by the combination 15
  • 18. of location-based technologies, Figure 8: Businesses see management of complex networks as the most significant freely available neighborhood data challenge raised by future developments in IT and analytics software. In health For your company, which of these business challenges will be most heightened by the impact care, social computing may create of IT developments over the next five years? (Select two) new options for drug trials—as well Managing complex networks of suppliers, 37% as a growing reliance by patients business partners and customers on the Internet for medical advice. Nor will government and regulation Protecting proprietary information and data 28% be immune from these forces (see Competition for technologically and analytically “Implications for government”). skilled employees 27% Executives expect new IT-driven Competition from new market entrants 25% business capabilities to have a major impact on competition in their Ability of data-rich large players to dominate 23% the market industries over the next five years. For Diminished ability of the company to protect its example, 62 percent of respondents brand(s) (e.g. due to such developments as online 18% to Accenture’s survey thought the consumer ratings, blogs, recommendation engines) emergence of new, faster or more Increasingly complex regulations for the 12% flexible business processes would have management of data a significant impact on competition Increasing consumer concern over data privacy 10% (see Figure 7). Nearly sixty percent of business leaders thought the same of greater consumer connectivity, and Insufficient Internet connectivity 9% 58 percent pointed to the greater returns resulting from applying Increasing levels of cybercrime 7% insights about customer preferences. Other 1% The changed ecosystem will create challenges, but also opportunities for Don't know 1% achieving high performance. Among the challenges, companies will need to manage more complex networks of suppliers, business partners and Figure 9: Business leaders see IT-related opportunities to improve company performance in multiple areas customers; protect proprietary information and data; compete for Which of the following IT-related opportunities do you see as most relevant to improving technologically and analytically your company’s performance over the next five years? (Select two) skilled employees; and respond to More efficient ways of working (e.g. online training, competition from new market entrants team collaboration across borders, office-less 32% companies) (the four challenges most cited by New possibilities to collaborate with other players in executives in our survey; see Figure 8). the value chain 26% On opportunities, the business leaders Reaching new customer groups 24% we surveyed saw potential to drive performance across many parts of Entering new markets 24% the enterprise, from creating more efficient ways of global working, and Better sourcing and analyzing of data 21% collaborating internally and externally, to reaching new customer groups Involvement of customers in innovation or 20% and entering new markets (the four production processes opportunities most cited by executives Customizing products and services more easily 18% in our survey; see Figure 9). Sourcing of ideas through "open" or collaborative In short, companies have the innovation with third parties (e.g. online communities, 15% universities, "open source" communities) opportunity to do things differently, harnessing the new market-making Integrating more complex supply chains 12% forces to drive high performance. Greater competition among suppliers 8% Other 1% Don’t know 0% 16
  • 19. Mastering orchestration New information technologies and Figure 10: Few businesses are advanced in their responses to new, technology-enabled the multi-polar world have combined opportunities and challenges to create turbulence in industry To what extent do you feel your company is prepared to deal with the opportunities structures. Although business leaders and challenges you identified? see many opportunities and challenges ahead, few are well prepared: We are significantly advanced in our strategic 11% response Accenture’s research has found that only 11 percent of business executives We have taken a number of steps in our strategic 49% believe that their companies are response, but still have some way to go significantly advanced in their We understand the implications and risks, but 30% strategic response (see Figure 10). have not made significant changes to strategy yet We have yet to prepare for these issues in a The challenge for businesses seeking systematic way 8% to achieve high performance is to We do not feel the need to change our strategy in move from a period of building global response—the company is sufficiently prepared 1% connections to one in which those connections are actively managed Don’t know 1% in new and different ways. In the changed ecosystem, a broader suite of technological and geographic options is available. Orchestrating those connections and relationships requires harnessing the six market- making forces in order to realize the potential for growth and value creation. Public-sector organizations have similar opportunities to deliver policy and services more efficiently and effectively (see “Implications for government”). 17
  • 20. Figure 11: IT is seen as critical in helping business orchestrate global operations previously, it would have taken seven and a half weeks to deploy them When it comes to managing a global business, to which of the following challenges will IT most help you to internally.31 (For more detail on Lilly’s respond over the next five years? (Select two) strategy, see “Case studies: Eli Lilly and Company.”) In realizing these Reaching customers globally/entering new markets 50% benefits, Lilly’s experience reflects the results of our business leader Encouraging collaboration between employees in different countries 44% survey: 44 percent of respondents saw IT as helping them most with Managing an international workforce 30% encouraging collaboration between employees; 30 percent, managing an Harnessing innovation from overseas sources 22% international workforce (see Figure 11). In order to reach customers Improving access to lower-cost suppliers 18% globally—the most common challenge Improving the environmental sustainability of identified by business leaders (see 11% global operations Figure 11)—computer giant Dell began using Twitter. Users can sign up to Sourcing capital globally 10% follow Dell, receiving messages about discounted products as well as links Improving access to natural-resource inputs 4% to purchase products or to forward the information on to others. Because Other 3% of its choice to open up to consumers on Twitter, Dell saw US$3 million in Don't know 4% additional sales in 2007 and 2008. In 2009, the cumulative sales figure rose to US$6.5 million, as the number of users following Dell on Twitter climbed to 1.5 million. Dell has seen some of the strongest growth in Twitter-related sales come from emerging markets, where broadband What are the opportunities the quality of products and services penetration is rising and adoption (for example, by acting upon customer for high performance? feedback on blogs), deepening of social media is strong among consumers. Dell’s Brazil operation, for Accenture’s research has identified existing revenue streams (using social example, has generated US$800,000 three principal ways in which networks), improving collaboration in just eight months of activity organizations are realizing between employees (through more through its local Twitter account.32 opportunities for achieving high efficient communication tools) and performance in the changed reducing overhead costs (using Extension: Developing current ecosystem: optimization, extension cloud computing). Moreover, the and transformation. maturation and near-ubiquity business in new areas of information technologies Companies can also harness IT to Optimization: Achieving means that most businesses can extend their business models into operational excellence in current very easily harness them. adjacent industries or markets. Google business activities Eli Lilly and Company, for example, offers a good example. The company is using cloud computing to optimize earns the bulk of its revenues from For most businesses, achieving its business. With pressure growing Internet advertising, which made excellence in execution is a perennial to cut fixed IT costs without up 97 percent of its 2008 revenues priority. In times of recession, it is compromising IT service levels during of US$22 billion.33 But now, to tap a key differentiator.29 Optimization the recession, the pharmaceuticals into a new market of Web users, the affords businesses the potential company began working with an company has developed Google Wave, to continue doing what they do, application cloud provider to grant a social computing platform that just better—with lower costs and computing capabilities to its global will allow users to collaborate and increased revenues. IT’s role in network of scientists. As a result, its communicate using richly formatted enabling this is not in question, but scientists can conduct more effective text, photos, videos, maps and cloud computing, mobile computing and efficient molecular modeling more.34 Although free at the point of and other technologies, separately or risk-analysis calculations across consumption, this product extends and in combination, can push that countries and regions.30 Lilly can the company’s business model by contribution to another level. They now have new computer servers getting more people to navigate its afford new players a range of up and running in three minutes; Web pages. Similarly, Google’s free opportunities, including enhancing mobile-phone navigation service, 18
  • 21. which streams live traffic updates revenues from Safaricom’s data- They continuously seek greater to handsets running on its Android services business segment (which insight operating system, is also envisaged includes M-PESA, text messaging as a future ad-supported service.35 and Internet services). Data services To better understand their global accounted for 18 percent of communities of consumers and ICICI Bank in India has used Safaricom’s total revenues in 2008—an stay ahead of the competition, technology to extend its business into increase of more than 50 percent from companies can use analytics adjacent geographic and IT-enabled 2007—and are likely to contribute an technologies to drive decisions markets—markets that were previously even higher proportion in the future.38 and actions. Good data analysis unreachable. In 2001, the company can help businesses understand launched its Non Resident Indian Smaller companies are also using IT to and manage their performance. (NRI) banking service, which uses disrupt industry dynamics, developing Web-based and wireless platforms business models that could become Collect the right data—with the right to provide the Indian diaspora the industry standards. For example, infrastructure community with e-banking services. prior to Zipcar’s arrival, the choices Forty-two percent of company Money transfers are its core offering for those who needed a vehicle were executives told Accenture that to NRIs, but the product range has to buy, lease or rent. But Zipcar has obtaining more and better data evolved to include savings and deposit established a new model: an IT- will be a strategic priority for their products, structured investment enabled car-sharing service. Zipcar organizations over the next five years options, mortgages, insurance and provides on-demand access to vehicles (see Figure 12). A key to achieving equity-linked products. ICICI has using high-speed Internet, mobile this is to establish the right analytical also introduced a number of product broadband and GPS technology. Users infrastructure. Many companies, variations which appeal to different register online to reserve vehicles, such as online DVD rental service market segments. For example, its and with the use of a “Zipcard,” they Netflix, have incorporated business “NRI Edge” is targeted at affluent can access, unlock and lock, and intelligence technologies from the NRIs seeking a range of priority return their vehicles.39 Alternatively, outset.43 Netflix uses recommendation services and exclusive privileges, while customers can use a mobile app algorithms to predict the movies its a card-based remittance account to find, reserve, access—or even customers will be interested in seeing. allows its customers to draw down sound the horn of—a Zipcar vehicle. Consumers’ movie recommendations NRI money transfers at ATMs in Customers can purchase services in are a key to understanding their India.36 With the NRI service serving increments of as little as an hour.40 preferences—and ultimately a pointer its clients as far apart as Canada and Since the US-based company was to the number of films they will the Middle East, ICICI has extended founded in 2000, it has opened offices purchase. Netflix regularly upgrades its business model into entirely new in Canada and the United Kingdom. its technology infrastructure through geographic—and virtual—territory While it is still relatively small, Zipcar open-source channels.44 A recent (for more on ICICI’s strategy, see has 80 percent of the car-sharing improvement to its algorithm came “Case studies: ICICI Bank”). market, has grown its user base to from a dispersed team of global 270,000 and expects to have 2 million researchers based in Austria, Canada, Transformation: Growing new users by 2014.41 By using technology Israel and the United States.45 business in new areas to work globally, this company is transforming industries: in 2009, Create insight from the data IT can help develop entirely car-rental company Hertz launched its new business models that serve Simply collecting data is not enough. own car-sharing service in Europe and Deriving actionable insight from markets that had previously been North America.42 unreachable—or even unimagined. the data is the critical next step. It can also help reshape industry Indeed, Accenture’s research shows dynamics by setting new standards The instruments of that it is becoming more important that others have to follow. orchestration to develop better data-analysis capabilities. Thirty-nine percent of How can businesses set about the business leaders we surveyed Safaricom, a mobile network operator realizing the opportunities presented expect that investing in better data- in Kenya, is using IT to develop a by the changed ecosystem? What analysis capabilities will form a part new business model and tap into a are the capabilities they can develop of their strategies for responding to new market. The company’s M-PESA to position themselves for effective the emerging challenges—such as service, launched in 2007, offers global orchestration and high greater competition from data-rich customers a way to transfer money performance? Accenture’s research companies—over the next five years anywhere in the country or to make has identified two broad hallmarks (see Figure 12). payments—for instance, school fees of success that will be increasingly and taxi fares.37 Essentially, Safaricom important to underpinning a has transformed its business model company’s competitive performance: by serving an entirely new market first, relentlessly gathering, analyzing in Kenya: mobile banking. In 2008, and using data; and second, developing the increase in demand for M-PESA a broader network of relationships contributed to a 94 percent rise in with stakeholders. 19