Consumer Goods Technology - October 2018 - 5

onsumer goods companies are under tremendous
pressure to interpret and respond to the evolving
expectations of their targets: friction-free, multi-channel shopping experiences; one-to-one relationships;
authentic and transparent branding; socially and
environmentally responsible conduct; and the nearinstant availability of goods wherever, and whenever, they choose.
Fortunately, alongside the rise of the consumer-focused mobile
and digital technologies that fueled this revolution has been a
proliferation of tools and platforms enabling brands to adapt.
And brands are embracing these tools, hoping to modify existing systems and processes and adopt new capabilities across the
enterprise to respond to evolving consumer demands.
But as they continue to funnel resources toward modernizing core business systems, building out direct-to-consumer
platforms and infusing artificial intelligence into more areas,
companies must stretch their still-conservative IT budgets to
cover experimentation with emerging options like internet of
things connectivity and blockchain.
All of these tasks come as chief information officers are challenged to transition their responsibilities from "simply" being
the keepers of IT to becoming IT ambassadors, partnering with
business unit leaders across the organization to leverage the best
technology in collaborative, strategic, business-building ways.
CGT fielded its annual "Tech Trends" survey to check in with
companies on how they're leveraging IT to address the aforementioned challenges. Following are key results from the survey.

Agendas Expand Faster Than Budgets
To start off with some good news, IT budgets seem to be reflecting the scope of necessary change: 44% of survey respondents
reported budget increases in 2018 (with 47% reporting flat
growth), but 56% are expecting a boost in 2019 (Figure 1).
What's more, IT spending as a percentage of total revenue
among respondents was 2.7%, a number that's slightly higher
than other industry reports but, optimistically speaking, could
F I G U RE 1 :

point to a growing understanding of IT as the catalyst for future
success and digital transformation as a business imperative.
At Smithfield Foods, transforming the business has meant
adding budget and additional staff in areas including cloud
support and monitoring, program management and analytics,
according to Julia Anderson, global CIO. Elsewhere, Conair's
single-digit budget increase was also focused on new digital
initiatives (see page 9).
Increasingly, the ratio of budget to sales isn't a predetermined
target but is built from the ground up, as zero-based budgeting
has taken hold in many industries. "Nowhere has the interest
been greater than in the consumer goods sector, where industry
leaders are delivering savings that would have seemed impossible a few years ago," according to McKinsey.

Analytics Leads Investment Areas
Like many other industries, consumer goods views analytics
as the key to responding to rising customer expectations. That
belief is reflected in their IT spending patterns (Figure 2). In 2018,
almost half (46%) increased their investment in tools for insights
and analytics, followed by supply chain (34%), marketing (31%)
and sales (29%).
The source of those funds, however, is shifting. Earlier handwringing over "rogue" tech spending by the business units has
become commonplace as more business applications became
available via software as a service. Without the need to run
software on internal infrastructure, it's been easier for business
units to attain required applications without the need for IT's
services - or its "permission" (Figure 3).
According to Edward Kenney, SAP's senior vice presidentglobal head of consumer products, agribusiness, one outcome of
the trend toward business units acquiring cloud services on their
own has been decentralized decision-making and the increasing
availability of cloud-based solutions. Companies now are beginning to combine "best of cloud" and enterprise-level solutions
to enable integrated, end-to-end business processes, which

IT Budget Growth

2018

2019

Remained the same

47%

Increased by 1-10%

26%

Increased more than 10%

18%

Decreased by 1-10%
Decreased more than 10%

9%
0%

Increase by 1-10%

53%

Remain the same

35%

Decrease by 1-10%
Increase by more than 10%
Decrease by more than 10%

9%
3%
0%

CONSUMERGOODS.COM | OCTOBER 2018 | CGT

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Consumer Goods Technology - October 2018

Table of Contents for the Digital Edition of Consumer Goods Technology - October 2018

Contents
Consumer Goods Technology - October 2018 - Cover1
Consumer Goods Technology - October 2018 - Contents
Consumer Goods Technology - October 2018 - 3
Consumer Goods Technology - October 2018 - 4
Consumer Goods Technology - October 2018 - 5
Consumer Goods Technology - October 2018 - 6
Consumer Goods Technology - October 2018 - 7
Consumer Goods Technology - October 2018 - 8
Consumer Goods Technology - October 2018 - 9
Consumer Goods Technology - October 2018 - 10
Consumer Goods Technology - October 2018 - 11
Consumer Goods Technology - October 2018 - 12
Consumer Goods Technology - October 2018 - 13
Consumer Goods Technology - October 2018 - 14
Consumer Goods Technology - October 2018 - 15
Consumer Goods Technology - October 2018 - 16
Consumer Goods Technology - October 2018 - 17
Consumer Goods Technology - October 2018 - 18
Consumer Goods Technology - October 2018 - 19
Consumer Goods Technology - October 2018 - 20
Consumer Goods Technology - October 2018 - 21
Consumer Goods Technology - October 2018 - 22
Consumer Goods Technology - October 2018 - 23
Consumer Goods Technology - October 2018 - 24
Consumer Goods Technology - October 2018 - 25
Consumer Goods Technology - October 2018 - 26
Consumer Goods Technology - October 2018 - 27
Consumer Goods Technology - October 2018 - Cover4
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