Welcome to The Week in Digital Transformation, our regular round-up containing everything you need to know about news, research, analysis and ideas on digital transformation from the past week.

This week, we’ve got masses of interesting developments, including not one but two major martech alliances by massive firms that are set to advance digital transformation; experiments by Chinese retailers who are struggling to keep up with their digitally advanced consumers; and new research that finds CFOs are leading the charge to transform digitally.

Meanwhile, this week’s key to digital transformation is identity verification – read on to find out why it could be crucial to businesses’ digital strategies.

(And remember to come along to the Digital Transformation Stage at Festival of Marketing 2018, hosted by Econsultancy, on October 10 & 11 for inspirational digital transformation case studies and insight into best practices.)

What the Adobe-Marketo acquisition means for digital transformation

The biggest news in the martech world this week is Adobe’s acquisition of marketing automation specialist Marketo for a reported $4.75 billion.

News first leaked about a potential acquisition a little over a week ago, when Reuters reported that the two companies were in talks about a deal, though at the time there was no certainty that the acquisition would go ahead. Last night, the acquisition was confirmed by tweets and blog posts from both companies:

Marketo’s announcement of the deal, authored by CEO Steve Lucas, proclaimed that the acquisition would “place customer experience and engagement at the heart of digital transformation”.

Adobe’s Executive Vice President Brad Rencher expanded on this in his blog post, explaining that:

“As consumer expectations continue to escalate, reimagining end-to-end customer experience is critical for businesses that sell directly to consumers (B2C) as well as businesses that sell to other businesses (B2B). Simply put, every business must become an Experience Business.”

This, according to Rencher, is the way that businesses undergoing digital transformation must approach the customer experience: by working to put experience at the forefront of everything they do. It tallies up with findings from a recent Econsultancy report into the future of marketing, which found that 93% of advertisers and marketers surveyed believe that customers increasingly want to buy experiences, not just products.

Clearly, Adobe believes in this to the point of being willing to put down close to $5 billion on an acquisition that will add to its customer experience offering, as well as shoring up its cloud software with Marketo’s B2B cloud platform.

CRN called the deal a “$4.75B bet on enterprise digital transformation”, and observed that the unification of Adobe’s digital experience and Marketo’s marketing platform “could become a major part of enterprises’ digital transformation plans”.

Having the right tech – and knowing how to use it – is a big factor in the success of an organisation’s digital transformation, and Adobe knows it, hence the move to snap up key martech players and focus its messaging around how the acquisitions will benefit enterprise digital transformation efforts.

The Marketo deal is Adobe’s second major software acquisition of the year, following on from its acquisition of ecommerce platform developer Magento for $1.68 billion in May. Given the naming pattern followed by both of these companies, can we expect a buyout of marketing automation management platform Maestro to be next on the list?

Further reading:

Alibaba Cloud and KPMG join forces to advance digital transformation

It’s clearly a major week for martech alliances between industry heavyweights. Big Four consulting firm KPMG has announced a partnership with the cloud arm of Chinese retail giant Alibaba, Alibaba Cloud, to help advance the digital transformation of businesses.

Marketing Interactive reports that as part of their partnership, KPMG and Alibaba Cloud will form a joint strategy team to develop cloud infrastructure solutions for clients looking to expand into new markets. The alliance between the two companies will focus on digital transformation, “new retail”, IT strategy consulting and cloud-based digital solutions, and aims to build a “strong global ecosystem” with cloud services and infrastructure.

Crucially, the partnership will allow Alibaba Cloud to expand outside of its heartland of China – and provide KPMG clients across APAC and Europe with an opportunity to access the Chinese market, where they can establish local cloud services from Alibaba Cloud.

It’s becoming increasingly clear that robust cloud computing services are going to be one of the most important resources at businesses’ disposal as they seek to transform digitally, with everything from content management systems to ecommerce platforms taking to the cloud, and cloud-based “[x] as a service” solutions proliferating across industries.

So the alliance with Alibaba Cloud will be a big feather in KPMG’s (already very feathery) cap, all while giving it an “in” to an extremely sought-after market. Meanwhile, Alibaba gets to ally itself with KPMG’s global network of businesses and in-depth knowledge of industries. Needless to say, the businesses that work with their alliance will likely benefit as well.

Further reading:

Chinese retailers face challenges in keeping up with their consumers

And in more China news: at Singapore Week of Innovation and Technology (SWITCH) 2018, a Fireside Chat between Paul Wong, Vice President at Fung Group Explorium, and TechNode Technology Reporter Nicole Jao shed some light on the digital transformation challenges currently facing retail companies in China.

Traditional retailers in China have a problem: the consumers that they serve are, in almost all cases, much more digital and moving at a faster pace than they are. “Believe it or not, consumers in China are fully digital, and a lot of brands and retailers are sort of analogue,” Wong told Jao during the discussion on TechNode’s ORIGIN Disrupt stage.

Fung Group, a Hong Kong-based supply management company covering a wide range of businesses, established Explorium, an omnichannel retail lab, in 2015 with the goal of conducting retail experiments using the latest digital technology. The lab experimented with using Chinese messaging app WeChat to bring consumers into physical stores, and conducted an 18-month experiment in which they used Bluetooth tracking devices to collect data on customers’ movements in-store and how much time they spent there.

WeChat logo

From these, Explorium gained valuable insights into how retailers can better engage their customers inside physical stores – but the experiments also revealed how much work needs to be done in order for Chinese retailers to get up to speed with their customers.

Wong explained that Chinese retailers are starting to digitally transform processes like enterprise resource planning (ERP), customer relationship management (CRM) and point of sale (POS), but go about this in a time-consuming and inefficient manner.

One of the solutions that Fung Group is promoting is working with start-ups, who are developing innovative technologies that help retailers optimise their supply chain.

Ecommerce heavyweights like Alibaba and JD.com are also making forays into offline retail, which is helping to nudge traditional retailers towards transformation.

Further reading:

How mature are marketers’ digital transformation efforts?

Last week, thousands of digital marketers from around the world gathered in Cologne for DMEXCO 2018, one of the industry’s biggest annual conferences.

Such a huge industry event presents a unique opportunity to gauge marketing professionals’ opinions on some of the most pressing issues of the day, which is exactly what eMarketer did in this piece on the maturity of marketers’ digital transformation efforts.

Five executives attending DMEXCO, from agencies, vendors and brands, share their thoughts on how far they’ve come with digital transformation, the ground they’ve still to cover, and the obstacles the industry faces in its bid to digitally transform.

Further reading:

Accenture research: Eight in ten CFOs are taking a leading role in digital transformation

We’ve heard about CTOs/CIOs (Chief Technology/Information Officers), CMOs and even CEOs needing to lead the charge on digital transformation. But what about CFOs?

According to new research released this week by Accenture, financial directors are increasingly taking a leading role in the push for digital change within their organisations. Consultancy.uk reports that as their role pivots away from the traditional accounting function, eight out of ten CFOs are now spearheading their company’s adoption of digital technology.

We know that digital transformation and the need to upgrade processes and technology affect every part of a business, but for CFOs to actually be leading digital transformation efforts still seems unusual. But the more you consider it, the more sense it makes.

A global poll conducted by Ernst & Young late last year found that CFOs rate “Upgrading IT and financial data analytics tools to professionalise finance management” as their number one priority, which inevitably leads to upskilling staff and recruiting technological specialists into the company. If CFOs are already prioritising these considerations within their own department, why wouldn’t they push for other parts of the business to do the same, and perhaps encourage the rest of the C-suite to adopt the same priorities?

Accenture’s research also highlighted the “non-traditional strengths” that the finance department brings to a business, in the realm of guiding the successful adoption of technologies, and forecasting their long-term value. (Image: Accenture)

The revelations are good news for anyone hoping to see a more top-down approach to digital transformation within organisations.

Commenting on the findings, David Axson, Managing Director of Accenture Strategy and CFO & Enterprise Value, UKI emphasised the importance of the CFO to the overall C-suite, saying that the Chief Financial Officer is “becoming the second most important C-suite executive, sitting at the right hand of the CEO and articulating a story about the financial results they expect to realise.”

He added that as the CFO’s role continues to evolve, we could see CFOs becoming “digital stewards” – “using data to drive value and improve efficiency while mapping out the digital investments required for their organisations to remain competitive.”

Further reading:

The key to digital transformation: identity verification

Labhesh Patel, CTO and Chief Scientist at Jumio, argues this week on Help Net Security that identity verification is a “key foundational tactic in any digital transformation strategy”.

According to Patel, identity verification is the “unsung hero” of an organisation’s digital transformation strategy, owing to the need to verify a consumer’s identity while conducting business online. He points to recent research by McKinsey, which predicts that the emerging identity-verification-as-a-service market will reach $20 billion in value by 2022, as evidence that ID verification is a “key driver of digital transformation”.

So, why do businesses need to make sure their ID verification is up to scratch? Patel gives three reasons:

1 – Customer experience: Consumers demand a “seamless digital experience”, and verification methods like knowledge-based authentication (security questions) and two-factor authentication are often perceived as intrusive and inconvenient by consumers. Both also have their flaws from a security perspective.

2 – Trust: Companies need to earn and maintain consumers’ trust via secure business processes as they digitally evolve. Research by PwC found that 87% of consumers are prepared to take their business to a competitor if they don’t trust a company to handle their data properly.

3 –  Scale: By using the latest identity verification technologies, including innovations such as biometrics, AI, machine learning and computer vision, Patel argues, companies can easily onboard new customers without compromising security, which empowers them to scale.