Transformation through Big Data, Cloud,

Mobile and Security

2015IBM Guide to Retail Technology Trends

One of the greatest challenges in the retail industry today is the pace of technological change, and the ways in which new technologies are fundamentally changing how people communicate, research, collaborate with each other, and choose goods and services. This revolution has leveled much of the playing field relative to traditional sources of competitive advantage, and it is redefining what it takes for retailers to win in the marketplace. Retailers must find new ways to be relevant to tech-savvy consumers, to compete with disruptive rivals, and to embrace new operating and partnering models that may be required in order to grow profitably in the future.

IBM has long contended that there are three key mandates or imperatives for success in retail: a) Deliver a smarter shopping experience, b) Build smarter merchandising and supply networks, and c) Drive smarter operations. We discuss our point of view regarding these imperatives in greater detail in the IBM Retail Solutions Guide.

These three imperatives remain a useful framework for thinking about what it takes to be successful in retail. But the how behind these imperatives is changing dramatically, in great part due to the pace of technological change: how to deliver better experiences to customers; how to offer unique assortments; how to drive efficiency and reliability in the supply chain; and how to maintain consistent and cost-efficient operations across store and back office functions—all of this is in the midst of unprecedented disruption and transformation.

This disruptive transformation is what we explore in this guide.

There are several dynamics or levers of change in play with regard to this transformation. The first is Big Data and Analytics. In its exponentially increasing volume, variety and potential uses, Big Data is becoming a new ‘natural resource’. Insight into trends, customers and performance can be turned into new selling, marketing, merchandising and supply chain strategies that drive market share and margins. Mining value from Big Data requires advanced analytics, cognitive computing and a new information technology infrastructure.

Traditionally, businesses have used analytics that can recommend what route may be best to take, based on past data. This kind of ‘descriptive’ analytics is being superceded by ‘predictive’ analytics that define the best options, based on data that indicates what is expected to happen next, not just what has already happened. Our research indicates that companies who successfully embrace predictive analytics are faster to market, gain a higher share of wallet, and achieve better customer retention than their peers.

The second dynamic is Cloud Computing: the delivery of IT and business processes as digital services. Cloud—the idea of ‘Anything as a Service’—is transforming all industries, through the unprecedented speed and agility it enables. Cloud can make it possible to inexpensively upgrade store, back office and omni-channel infrastructures, to support the growing technology demands of customers and for the future. Finding the right balance of on and off premise computing, software and services is rapidly becoming one of the most important elements of retail IT strategy.

The third dynamic is the rise of Mobile and Social Engagement. The ways in which we interact online, and the ways that we connect with others, have gone through a revolution just in the past two years. Mobile technologies—smartphones, tablets, location-sensing devices and the like—have made connectivity a constant and ubiquitous aspect of our lives. And as network access now extends to a growing ‘Internet of Things’, the physical world is uniting more fully with the digital and virtual worlds. Simultaneously, social networking technologies have brought us all into much closer communication with each other, and with the businesses and other organizations and institutions in our lives.

For retailers, the impact of mobile and social technologies is huge: connecting with your customers as individuals, and providing information in-context and in real-time, can foster much more relevant relationships with them. And at the same time, using mobile and social to facilitate the working interaction of your employees, suppliers and partners can drive significant gains in efficiency and productivity.

The fourth dynamic is the issue of Security in a digital world. Not a profit center, and not a pleasant topic to think about, security is nonetheless becoming one of the most serious concerns of our time for retail CEOs. The uncomfortable truth is that the defenses businesses have in place to secure themselves and their customers’ data are often grossly inadequate, in comparison to the sophistication of today’s international cyberattackers.

Retail is one of the most exposed of all industries, due to the volumes of information it processes, the quantities of sensitive private data retailers are entrusted with, and the proliferating number of entry points to their networks and systems. A retailer’s data must be recognized for what it is: a ‘crown jewel’ that must be protected from all angles, with security established as a corporate priority that is governed by value at risk, not just by budget. Effective safeguards are indeed available to protect against intrusion, to quickly detect suspicious activity, and to mobilize resources so as to ensure containment and defeat.

Retail made with IBM

This guide provides a quick overview of what we believe retailers need to address within each of these areas of technological transformation, and of the IBM solutions supporting that transformation.

IBM offers everything retailers need to keep pace with today’s transformations. We listen to what our retail clients tell us, and we design our offerings to address their needs, across roadmap development, solutions, infrastructure, research sciences and consulting. We help retailers deepen their relationships with their customers; we help them offer differentiated assortments to drive competitive advantage; and we help them achieve operational excellence, to support continued profitable growth.

Please contact your IBM representative to arrange for a briefing on any of the offerings in this guide.

Sincerely,

Your IBM Global Retail Industry Team

Introduction

2 3

Big Data and Analytics

Why it’s important

‘Big Data’ refers to the vast and growing collective pool of information that is available to any retailer who decides to tap into it and drive value from it. Big Data includes all forms of enterprise data, but extends far beyond this. It belongs to no single institution or enterprise, follows no single structure or format, and is constantly evolving, growing and changing shape. It encompasses all kinds of publically-available data, generated from every conceivable source.

Big Data is rapidly becoming a global ‘natural resource’ that can be mined using advanced analytics so as to give new insight into any number of issues of interest to retailers. A sampler of the kinds of things Big Data could shed light on might include emerging consumer trends and product trends, the management of operational resources, the maintenance of equipment and physical plant, forecasting short- and long-term demand more accurately, and understanding individual customers much more intimately than has ever been possible in the past.

To appreciate the implications here, let’s consider this last item a bit more closely, as a case-study in how big data and analytics can drive value for retail. Everyone’s well aware that consumers are using today’s technologies very aggressively in their shopping: with nearly universal information access, they are researching products, checking reviews, talking to others and comparing prices and offers assiduously. They want pertinent information and offers, delivered in a timely way: the right information, at the right moment, based on the shopping task they have defined for themselves at the time. In essence, consumers want retailers to treat them as if each were a unique ‘demographic of one’—a single individual who is, at any given moment, at a specific place in their own personal shopping process, and who should be related to in an informed and timely way by any retailer hoping to capture their business.

It’s no mystery why consumer demands are escalating like this, in 2015: it is because their recent experiences have convinced them that retailers can, in fact, provide this level of service, in a dependable and intelligent way. They know that the data now exists, in the wide realm of Big Data, and that the necessary analytics exist and are within reach. At any moment, within this unbounded universe of data lie all kinds of telltale clues about what individual consumers are shopping for, what their specific preferences are, who they are taking advice from, what their price sensitivity may be, and what they are likely to do next. These are clues from which a retailer might readily deduce what kinds of offers could be decisive in persuading them to purchase a given item from a specific source— and at the most profitable price.

Of course, the field of customer analytics is just one example of an arena in which leading retailers will mine insight and gain competitive advantage from Big Data and Analytics. We stand at the threshold of untold innovation in this broad realm, as competitors in many different industries will be inventing new ways to drive value from this rapidly expanding and evolving natural resource.

Potential Benefits

Better decisions that increase sales and margins

Improved customer satisfaction

Increased market share

Reduced operating costs

Core Capabilities

IT Infrastructure

• Manage new workloads needed for big data and advanced analytics

• Leverage cloud computing for flexibility, scalability and reliability

• Develop a comprehensive approach to digital security

Establish an Information Foundation

• Access, store, archive and analyze many types and sources of data

• Process and analyze data in real-time

• Ensure the quality, availability and integrity of data

Turn information into insight

• Descriptive Analytics for operational reporting and planning

• Predictive Analytics to uncover patterns and trends

• Predictive Analytics to optimize decisions

• Cognitive Computing to interact with human users more naturally

New Enhanced

Applications

All Data

• On premise• Cloud• External• Structured• Unstructured• Images• At rest• In motion

IBM Watson

Named after IBM founder Thomas J. Watson, Watson was developed in IBM’s Research labs.

Watson is a cognitive computing technology that processes information more like a human than a computer—by understanding natural language, by generating hypotheses based on evidence, and by learning over time. And learn it does: Watson “gets smarter” in three ways: by being taught by its users, by learning from prior interactions, and by being presented with new information. This means organizations can more fully understand and use the data that surrounds them, and use that data to make better decisions.

Watson is highly versatile, and can function in a number of different contexts and capacities. In the three years since its debut on the television quiz show Jeopardy!, IBM has advanced Watson from a game-playing innovation into a commercial technology. Watson is now delivered from the cloud, and is able to power new consumer and enterprise services and apps.

4 5

Big Data and Analytics

Selected IBM Offerings

Software solutions

• IBM SPSS®

• IBM Cognos Business Intelligence

• IBM Predictive Customer Intelligence

• Social media analytics solutions

• IBM Decision Optimization

• IBM DB2®, Informix®, and IMS™

• IBM InfoSphere BigInsights

• IBM InfoSphere Streams

• IBM IIG

• Watson Engagement Advisor

• Watson Explorer

• Watson Discovery Advisor

• Watson Analytics

Consulting, Process and Implementation services

• IT Strategy and Performance Assessment

• Enterprise Architecture Assessment

• Application Portfolio Assessment

• IBM Business Analytics and Optimization (BAO) Jumpstart

• Advanced analytics and recommended next best actions

• IBM IT Security Consulting Services

• IBM Security Operations Optimization Services

• IBM Business Process Management Visioning and Roadmap

Managed services

• Marketing and consumer analytics

• IBM Global Technology Services® team:

– Strategic IT outsourcing

– IBM Softlayer

– IBM Fiberlink® mobile device management on cloud

– Backup and archive on the IBM Cloud

– Managed Security Services

• Through the IBM Global Business Services® team:

– Application management

– Application testing

• Business process outsourcing (BPO) record-to-report services

Infrastructure

• Advanced analytics on IBM Power SystemsTM and IBM System z® hardware

• IBM PureData System for Analytics, powered by IBM Netezza® technology

• IBM Softlayer

• IBM Retail Data Warehouse

Case studies

This retailer improved customer loyalty by choosing IBM Big Data and Analytics to maximize their insights into purchasing behavior through behavioral models and customer segments based on analyzing customer profiles, purchase history, and social media postings.

• Increased sales through improved target marketing

• Improved loyalty with more relevant, timely customer offers

• New insights into customer needs, aiding in future product design

This retailer uses IBM analytics to create a 360-degree view of customers across channels, delivering highly tailored and personalized marketing campaigns, and boosting customer loyalty and retention.

• 100 percent ROI within two years

• Increased data processing speeds by 450%, accelerating data analysis and segmentation

• Accelerated report generation speeds by 90 percent, from weeks to minutes, helping marketers develop and execute campaigns faster

This major international eyewear retailer uses the IBM PureData Solution for Customer Insight to establish a 360-degree view of customers, to gain actionable customer insight for marketing activities.

• Solution identifies the highest-value customers out of nearly 100 million

• Targets individual customers based on unique preferences and histories

• Forecast 10% improvement in marketing effectiveness

A global leader in food & beverage

An electronics retailer in the United States Luxottica

How we deliver it

To capitalize on the opportunity to leverage new data sources, build intelligence, and communicate with customers more effectively, IBM offers a range of analytic capabilities, from operational reporting to self-learning systems:

• IBM® Cognos® Business Intelligence provides analytics and planning that help your managers understand how stores, channels, merchandise and marketing organizations are performing.

• Predictive Customer Intelligence (PCI) identifies your customers’ shopping patterns, preferences and behavioral drivers, and predicts the best way to deliver timely and relevant interactions with each.

• IBM Decision Optimization prescriptive analytics can make you more efficient by automating complex decisions and trade-offs around limited resources, to optimize supply chain design, supply networks and inventory levels, to fulfill on the promise of omni-channel retailing.

• IBM Watson™ has ushered in a new era of cognitive computing—technology that can understand natural human language, processing information in a way similar to how people think, and learning as it gains access to increasing quantities of information. Cognitive computing can make possible significant advances in an organization’s ability to quickly analyze, understand and react to vast quantities of diverse data. Watson can ingest retail data content to help solve all kinds of business challenges: imagine a system that automatically drives original insights out of your sales data, product information, vendor contracts, procedure and policy manuals, weather conditions, economic factors, social feeds, and customer reviews and blogs. Watson can support business processes as well as consumer engagement. You can use Watson’s capabilities to scale

and accelerate expertise among all of your associates, providing them with the tools needed to make the best possible decision at any point in time, directly improving sales, inventory productivity and customer service. Watson can also serve as a ‘personal shopping assistant’ and can interact with your customers through natural language to bring forward the most relevant product and service recommendations. While Watson can be deployed on its own or through a larger platform, many of these new types of data and tools require robust architectures, processing power and the ability to deliver information to a multitude of devices, particularly phones and tablets. A necessary element for retail IT is a big data platform—distributed processing of large data sets across clusters of commodity servers—to cost-effectively process the large volumes of structured and unstructured data.

• IBM Watson Foundations is a big data and analytics platform that can help make sense of all your information in ‘right’ time, and put insight into the hands of your managers and associates so they can make better decisions with speed and confidence. It allows you to ingest, cleanse, manage and sift through millions of transactions as generated every day, in a quick and cost-effective manner. You can leverage internal information such as POS, online, call center, customer transaction and product data, as well as tap into relevant data from outside of your organization, like social media, reviews, demographics, sensors, GPS and more. This means you get fresh real-time insights into your consumers’ behaviors, merchandise trends, and your brands’ reputation, value and performance, on an ongoing basis.

• IBM Data Warehouse (IBM PureData™) helps to organize, store and analyze various types and uses of data.

• IBM InfoSphere® Streams is an advanced analytics platform that allows user-developed applications to quickly ingest, analyze and correlate information in motion from various sources.

• IBM InfoSphere BigInsights™ combines open source Apache Hadoop with enterprise functionality and integration to deliver large-scale analysis with built-in resiliency and fault tolerance.

To operate in the new era of big data and advanced analytics, the right IT infrastructure is essential. Retail CIOs must intelligently manage, store and archive data in the most cost-effective manner. Advanced technology platforms, such as the IBM PureSystems® family, efficiently consolidate and optimize the use of systems to deliver analytics. We take infrastructure up a level in performance by providing systems equipped to facilitate implementation of the analytics applications you need to run your business.

And, a range of improved deployment options can allow you to plan how big data initiatives will be run inside and outside your organization, including: on premises, in the cloud—public or private, as a service, or hybrid-a mix of cloud and on-premises. IBM SoftLayer® gives you the highest performing cloud infrastructure available, providing automated and efficient ways of optimizing and procuring computing capacity flexibly across many processes, and dramatically shortening development cycles. See the discussion of Cloud Computing in this booklet for more information.

6 76

Cloud Computing

Why it’s important

Technology continues to change how consumers shop. And, depending on the choices a retailer makes, information technology can either become a vital enabler of success—or a crippling impediment. To play its critical role in powering a profitable retail business, IT must be dependable, it must be secure, it must be flexible, and it must be as low cost as possible. At IBM, we’ve long been convinced that there are areas within a retailer’s IT structure where Cloud computing can offer clear advantages over other available approaches.

Cloud’s most fundamental advantage is that, if applications can be run on a shared set of computers, a very large amount of computing power can be made available to each process, with that computing capacity being flexed on a continuous basis to support the intensive bursts of processing that occur at different moments in the course of each process. This characteristic is known as dynamic scalability or elasticity. IBM’s studies have shown that approximately 85% of a retailer’s computing infrastructure may be idle at any given moment—an underutilization of resources that Cloud can go far toward remedying.

We think Cloud is becoming much more relevant, and of potentially greater value, than it has been even in the recent past. This is in part related to a broad-based need to make IT infrastructure more flexible and cost-effective, and in part to the emerging computing demands associated with performing analytics on Big Data (see the discussion of Big Data and Analytics in this guide).

Cloud is rapidly becoming recognized as a proven way for retailers to deploy new capabilities much more quickly and inexpensively, and to pursue innovation in a more accessible and cost-effective manner. And as concerns around security continue to grow, it bears noting that Cloud can be just as secure as other forms of IT architecture, even those that are maintained entirely within the firewall of a single enterprise.

Potential Benefits

Improved IT responsiveness to business needs

Improved customer satisfaction

Reduced operating costs

IBM SoftLayer

Cloud computing is defined as the delivery of on-demand computing resources—everything from applications to data centers—over the Internet, on a pay-for-use basis.

Cloud computing doesn’t come out of the sky. It comes from physical hardware inside brick-and-mortar facilities, connected by hundreds of miles of networking cable. And cloud is not a commodity: no two clouds are built the same way.

Core Capabilities

SOFTWARE as a SERVICE•Commerce-as-a-Service•Digital Channel Services•Merchandise Analytics & Optimization•Payment Systems/Gateway

Highly configurable, multi-tenant software

PLATFORM as a SERVICE•Mobile & loT Development/

Mashups•BigData Analytics•Cloud Applications Development

“Born on the web/cloud” applications

INFRASTURCTURE as a SERVICE•Digital channel/e-commerce platform•Cross Channel Operations/DOM•Customer Analytics•Enterprise Marketing•Customer Care•DevOps, Continuous Delivery

Applications, benefiting from flex capability

ON PREMISE PRIVATE INFRA•Merchandise Planning•Finance•Master Data Management•Data Repositories & BI•Enterprise Integration• IT Ops Management

Typically custom, legacy applications

HOSTED PRIVATE CLOUD•Merchandise Operations•Product Development•Supply-Chain Optimization•Supply-Chain Visibility•Supply-Chain Logistics

Typically packaged applications

PROCESS as a SERVICE•Human Resources•GNFR/Indirect Procurement•F&A reporting

Managed processes, typically non-core retail functions

•Store POS•Store Ops/Systems

MicroCloud can bring cloud to the store

Interchangable

Dedicated and private to retailer

PaaS is typically built on top of IaaS

IBM SoftLayer offers the highest performing cloud infrastructure available. It provides a single platform that takes data centers around the world, offering the widest possible range of cloud computing options, and then integrates and automates everything.

There are other cloud and hosting providers who adhere to traditional billing practices of charging customers for each and every communication their servers send or receive. With

SoftLayer, we do things differently. Our servers come with terabytes of outbound bandwidth included: 5TB for virtual servers and 20TB for bare metal servers. And, IBM does not charge for inbound traffic to our servers, nor do we charge for bandwidth usage across our Global Private Network. This allows our clients to build on a Global Private Network essentially free of charge, just by being a SoftLayer customer.

8 98

Case studies

LookHunters, a Colombian apparel e-commerce retailer, chose SoftLayer as a technological base for their website due to SoftLayer’s great flexibility, speed and performance.

• Enables support for explosive growth in sales and website traffic by providing a high-performance, enterprise-grade cloud infrastructure that can expand to accommodate any workload

• Supports a high level of security around online transactions, the upload of content for new products, and the management of database users

• Improved LookHunters’ management and operability of their website and applications, directly contributing to positive experiences for users

This global retailer chose advanced IBM customer analytics solutions using the IBM SmartCloud® to provide an individualized shopping experience for each online customer.

• Cost-effectively delivers insight into customer behavior

• Enables the rapid design, execution and measurement of one-to-one customer communications across all touchpoints, both online and in-store

This retailer chose to implement sophisticated IBM customer analytics, includlng IBM Digital Marketing Optimization suite and IBM WebSphere® Commerce Enterprise, delivered via the IBM SmartCloud as Software-as-a-service.

• Enabled development of targeted marketing campaigns to capitalize on key factors that impact conversion rates

• Boosted customer engagement by enabling creation of online stores that target specific consumer groups

• Approach allows them to access these sophisticated processes on a pay-as-you-go basis, while also avoiding the need to invest in dedicated hardware for this purpose

LookHunters An Asia-Pacific retailer A European department store chain

Bluemix is IBM’s strategic cloud-based application development environment. Based on the open source Cloud Foundry project, Bluemix provides an open-standards-based platform for building, managing and running applications of all types, including web, mobile, big data, and smart devices.

Bluemix allows developers to easily compose new business applications without the need to set up an underlying architecture. Web and mobile applications can be rapidly and incrementally composed from services

provided by IBM, the open source community and an ecosystem of partners. This means retailers can quickly and cost-effectively develop, deploy, and continually enhance digital applications for consumers, employees, suppliers and other business partners.

Delivered as a platform-as-a-service (PaaS) model, the combination of Bluemix platform, capabilities and services can help deliver faster, more inexpensive and higher-quality applications than ever before.

IBM Bluemix

Cloud Computing

Selected IBM Offerings

Software solutions

• BM Digital Marketing Optimization

• IBM Digital Analytics

• IBM Digital Commerce on Cloud

• IBM Omnichannel Marketing on Cloud

• IBM Sterling Commerce® Transportation Management

• IBM Sterling B2B Collaboration Network

• IBM DemandTec® Assortment Optimization

• IBM Emptoris® Contract Management

• IBM DevOps Services

Consulting, Process and Implementation services

• Cloud Strategy and Design

• Cloud Security Services

• Cloud Implementation – IBM Private Modular Cloud

• Cloud Implementation – Testing services on Cloud

Managed services

• IBM Cloud Managed Services for Oracle and SAP

• Managed Security Services

• IBM Recruitment on Cloud

• IBM Emptoris Spend Analysis on Cloud

• IBM Counter Fraud on Cloud

Infrastructure

• IBM Mobile Web Push

• IBM SoftLayer

• IBM Bluemix™

How we deliver it

The journey to Cloud computing can take a number of different paths. Often retailers want to test out Cloud concepts by taking advantage of Infrastructure-as-a-Service for specific computing needs. This often yields valuable lessons that can then be applied towards broader usage of Cloud.

In many instances, retailers already know which IT workloads tend to be their biggest pain points: perhaps continuous development and delivery to support e-commerce and digital readiness initiatives, customer analytics, or development and testing environments to support business transformations such as e-commerce or merchandising and supply chain. IBM addresses these via specifically-tailored Cloud Managed Services for ERP or Smarter Commerce® and DevOps.

Often, retailers have a general sense that cloud could be beneficial to them, but are looking for a more measured analysis on how to approach this. In such a case, we begin with our cloud consulting services to identify quick wins; application workloads that can immediately benefit from cloud and then proceed to deploy our rapid migration techniques to move the application to IBM’s SoftLayer Infrastructure-as-a-Service. Depending on the application, these migrations can often be done in hours to days.

In parallel, we execute a detailed workload analysis of the retailer’s IT portfolio. By looking at applications, data sources, integrations, application-affinity, user-group interactions, SLA, connectivity and security needs, we identify logical groups of applications that are the most suitable candidates to be moved to a

cloud environment. Then, we develop a roadmap to operationalize the movement of application workloads into cloud environments.

It’s important to remember that Cloud’s effectiveness depends on technical capabilities such as capacity flexing, the automation of IT tasks, dynamic provisioning and auto-scaling, among others. These considerations require iterative analysis, and the ongoing tuning of a retailer’s portfolio. Thus, the move to Cloud computing is a normally a journey, and not simply a one-time-and-done affair. A part of IBM’s implementation approach is to empower the retailer’s IT organization to take this on, while also offering fully-managed cloud services as appropriate.

10 1110

Core Capabilities

Mobile Development Platform

• Development & Lifecycle Management

• Scalable Backend Services

• Integration Services

Mobile Management

• Device, application and asset management

• Security

• Technical support, services and repair

Applications and User Experience

• Customer Mobile Experience

• Mobile innovation and design

• Out-of-the-box Industry Solutions

Collaboration Platform

• Social software

• Realtime social communications

• Content management

B2B and B2C Internal and External Usage

Mobile & Social Engagement

Why it’s important

The ‘Era of Continuous Computing’ is upon us. With smartphones, tablets and other mobile devices proliferating everywhere, we can all stay in touch at nearly all times and places. And, as an ever-larger majority of consumers are using mobile devices worldwide, it becomes possible to paint a detailed picture of a person’s activities—and to infer a great deal about their interests and intentions of the moment.

For retailers, this truly changes the game: it enables real-time awareness, real-time understanding, and real-time personalized engagement and interaction. As consumers become more continuously connected, retailers who are competing to win must themselves become similarly connected and engaged, in real-time, with their customers.

Consumers now expect retailers to provide an online experience that is optimized for their mobile devices. They want shopping to be smooth, uncomplicated, and personalized, regardless of where they are or what device they may be using. They also expect speed and responsiveness when they do research, buy an item, or change an order. Since they are used to using mobile devices to get advice on products from their friends and social network, many now also want to be consulted by their favorite retailers on the co-creation and introduction of new products and services.

Retailers are just beginning to uncover the myriad ways that mobile and social capabilities might be used to drive increased sales, market share and customer loyalty. Inside the store, retailers need to invest in wi-fi and in related solutions that can use real-time information about exactly where shoppers are and what they are doing, to enrich the in-person experience with relevant digital content, and to drive more personalized one-on-one engagement than ever before.

And, mobile technologies can at the same time help retailers become more oper-ationally efficient. Tools that enable real-time communication can foster new forms of collaboration and education, and can make working relationships much closer and more efficient, such as between managers and employees, employees and their co-workers, and between employees and suppliers or other business partners.

Equipping your associates with mobile technologies is quickly becoming an imperative, including support for bring your own device (BYOD). Placing into their hands the most pertinent info on customers, merchandise, inventory and orders, across all channels and sources, will put your associates in a far better position to make the best decisions, and to deliver better customer service, higher sales, and improved customer satisfaction.

Potential Benefits

B2B: Higher service levels

Great retention

B2C: Greater loyalty

Increase sales and margins

In 2014 Apple and IBM announced an exclusive partnership to give business professionals everywhere the unique capabilities of iPhones and iPads, powered by the knowledge, data, analytics and workflows as defined by the individual enterprise.

This partnership aims to redefine the ways that work is done, by addressing key industry mobility challenges and by driving true mobile-led business change, grounded in four core capabilities:

• A new class of more than 100 industry-specific enterprise solutions, all with native apps, developed exclusively from the ground up, for iPhone and iPad

• Unique IBM cloud services optimized for iOS, including device management, security, analytics and mobile integration

• New AppleCare service and support offering tailored to the needs of the enterprise. IBM is the exclusive partner for delivering AppleCare

• New packaged offerings from IBM for device activation, supply and management

To transform the in-store retail experience, IBM and Apple are introducing the Store Associate Suite with two new apps designed to enable enhanced engagement between

customers and sales associates. Using analytics, the Sales Assist and Pick & Pack apps will improve sales productivity by optimizing the shopping experience for customers through better empowerment of in-store sales associates. These apps will use real-time intelligence to direct associates to customers and allow them to provide real-time product, inventory availability and location information as well as to deliver personalized offers for customers, based on historical patterns and profile data.

The new IBM MobileFirst for iOS solutions will be built in an exclusive collaboration that draws on the distinct strengths of each company: IBM’s big data and analytics capabilities, with the power of more than 100,000 IBM industry and domain consultants and software developers behind it, fused with Apple’s legendary consumer experience, hardware and software integration and developer platform. The combination will create apps that can transform specific aspects of how businesses and employees work using iPhone and iPad, allowing companies to achieve new levels of efficiency, effectiveness and customer satisfaction—faster and easier than ever before.

As part of the exclusive IBM MobileFirst for iOS agreement, IBM will also sell iPhones and iPads with the industry-specific solutions to business clients worldwide.

Apple + IBM

12 1312

Case studies

This South Korean retailer chose IBM Analytics to track shoppers’ buying patterns and purchase histories, and to provide customers with a customized home page, automatic product recommendations and tailored promotions.

• Expected to boost sales and increase customer retention rates through targeted offers and personalized web and mobile interfaces

• Expected to reduce operating costs by USD2 million through improved efficiencies

• Expected to increase profits by USD20 million over three years with the expansion of online shopping into the mobile arena

This European footwear retailer chose IBM Connections social business software to equip store associates with robust iPad-based social apps at a reasonable cost.

• Associates equipped with iPad tablets at 500 stores

• Improved business processes, productivity and employee engagement

• Fosters greatly increased collaboration and knowledge sharing, while boosting employee job satisfaction

This major US electronics retailer chose IBM Business Partner PointSource to integrate IBM WebSphere Commerce software with IBM Worklight 5 software, to provide a consistent cross-channel user experience.

• Delivers consistent user experiences across channels

• Enables mobile customers to execute product purchases

• Allows for code reuse across mobile and desktop platforms

NS Shopping Co. Ltd. HR Group A multinational supermarket chain

Mobile & Social Engagement

Selected IBM Offerings

Software solutions

• IBM Worklight® Platform

• Fiberlink MaaS360

• IBM Security Access Manager for Mobile

• IBM Trusteer

• IBM Tealeaf CX Mobile

• IBM Mobile Push Notification

Consulting, Process and Implementation services

• IBM MobileFirst Applications & Platform Services

• IBM Interactive Experience Workshop

• IBM MobileFirst Studios

• IBM Ready Apps

• IBM Business Process Management

Managed services

• IBM SoftLayer

Infrastructure

• IBM Bluemix Mobile Cloud Services

• IBM Cloudant

How we deliver it

We start with the concept of systems of engagement, which are designed to extend traditional back-office systems of record (such as finance, HR, merchandising and commerce) into the hands of your employees, empowering them with a great deal of new information and insight, so they can collaborate and make informed decisions in context, and in real time. When used effectively, these systems of engagement can revolutionize how they interact with customers, through establishing a relevant and continuous dialog, and also how they interact and collaborate with other employees and with suppliers and partners.

One key to a winning mobile and social strategy is using an advanced platform for developing and managing the lifecycle of apps. IBM MobileFirst lets you quickly develop, test and deploy quality mobile apps across multiple platforms, and easily integrate apps with your enterprise data, systems and services. Then, to accelerate development and create full-function apps, you need scalable backend services: IBM Bluemix provides key mobile cloud services, including standard APIs, analytics for reporting and for insight on app usage, workflow for

process automation, cloud storage for mobile data management, and app scanning for security. And, to optimize mobile performance, IBM Cloudant® manages data seamlessly between networks, platforms and mobile devices, so users experience the quick and reliable performance they expect.

It’s also critical to make your mobile apps as engaging and value-add as possible for your users. IBM Interactive, the world’s largest digital agency, teams with IBM Research to deliver innovative digital strategy and application design capabilities, to make your apps appealing and cutting-edge, whether they are for use by customers, associates or business partners.

IBM and our business partners also provide a wide variety of out-of-the-box solutions, including Mobile Pick, Product Finder, Suggestive Sell, that can give you a head start in accelerating your mobile transformation. IBM Mobile Push Notification provides a flexible, simplified environment for creating notification campaigns that engage mobile app users at the optimal time and place. And, to optimize the experience and detect unintended customer or employee obstacles or

difficulties in using an app, IBM Tealeaf® automatically detects issues and provides recommendations for improvements.

Security is always a central concern with mobile apps. IBM MaaS360® Enterprise Mobility Management provides enterprise-class management and security for devices, apps and content, to protect your servers, databases, and IT infrastructure as mobile devices access them. To keep mobile devices operational, IBM provides AppleCare for Enterprise which includes 24/7 technical support as well as hardware repair and replacement services for iOS devices.

Becoming a social business means connecting employees, suppliers and other partners so as to enable superior information sharing that can improve productivity and profitability. IBM Connections Suite provides world-class social software, real-time social communications and content management. Among the many benefits delivered by these capabilities are relevant shopping and services for consumers, just-in-time education and insight for associates, and improved performance from suppliers and partners.

14 1514

Security Why it’s important

It seems that every year, the technology landscape experiences a tectonic shift. With each new technology and touchpoint comes new IT security concerns: new data sources, new kinds of devices and applications, and the expanded use of social networks, collaboration tools and cloud computing. And with all this comes the threat posed by those who will attempt to prey upon businesses and consumers, to steal and disrupt.

The sophistication and scale of malicious attacks, as well as their sheer destructiveness, is growing dramatically. While the news of the latest attacks has come to seem almost routine, the costs are in fact staggering: the average total cost of a data breach in 2014 was US$3.5 million worldwide, up 15 percent over the previous year, and in the United States, the average cost is higher—estimated at US$5.85 million. And the issue is particularly acute for retailers, because private consumer and credit card data is at stake. Without sufficient safeguards, your brand, reputation and even your future in business may be at stake.

And retail is one of the most exposed and vulnerable of all industries, due to the volumes of information and transactions retailers process, the quantities of sensitive private and financial data they are entrusted with, and the proliferating number of entry points to their networks and systems. Retailers who have already been victimized will testify that a major data breach is an extraordinarily disruptive and damaging event—disruptive to the business, disruptive to customer relationships, and enormously destructive in terms of public image and reputation, as well as in direct costs.

In the face of such mounting dangers, many retailers are deciding that security now merits the involvement of the full C-suite, to establish it as a serious organizational priority. Only with the participation of the most senior leaders can the right tone be set, with an effective governance model put in place to ensure that the right practices are adopted and adhered to across the entire enterprise. These indispensable measures are very unlikely to be achieved if the matter of security is delegated primarily to a chief information officer (CIO) or chief information security officer (CISO).

With the right safety measures in place, retailers can place themselves in position to reap the benefits of the latest interactive technologies, so to engage with shoppers in a dependably secure way, while also raising employee productivity and shielding the organization from intrusion and from possible reputational damage.

Potential Benefits

Reduced risk

Lower operating costs

Higher customer confidence, increased sales

Core Capabilities

Detect Threats

• Continuously search for patterns

• Advise of threats

• Contain intrusions before they do serious harm

Prevent Attacks

• Defend every network access point

• Impede breaches and isolate threats

• Protect sensitive data

Respond Continuously

• Effective process controls

• Rapid response mechanisms

• Quick action when breach occurs

16 1716

Security

How we deliver it

At IBM, we’re convinced that the retail industry must address the challenge of digital security in a long-term, strategic way, using a multilayered approach built on a combination of hardware, software and services. Together, these comprise a comprehensive and robust set of tools and best practices designed to frustrate intruders, mitigate attacks and protect your organization. When employed consistently, they address security issues effectively, through early detection, removal and remedy.

It all starts with leadership and awareness. An IBM Cybersecurity Executive Awareness Briefing can help educate top executives on the latest attack methods and defenses, the role of social media, and on advanced technological and operational defenses. This briefing can also help you define quick actions that can be taken to immediately strengthen your existing defenses.

The IBM Security Maturity Benchmark Assessment can evaluate the effectiveness of a retailer’s overall security posture, using verified data to compare your posture with those of peer organizations. This assessment can highlight where a retailer is strongly defended and where it is vulnerable, and can provide the basis for a strategic plan of action around security enhancement.

Prevention remains a vital frontline element of an effective security strategy. You require real-time protection that can frustrate attacks and disrupt attack chains. IBM Threat Protection System breaks critical points in the attack chain with preemptive defenses on both the endpoint and the network. Through its unique behavioral-based approach, we detect and prevent even unknown attacks, including those utilizing advanced malware. IBM Trusteer Apex™ blocks the installation processes related to malware, in order to stop malware at the point of infection. IBM Security Network Protection disrupts the malware lifecycle by detecting existing malware on the network, and

by blocking command-and-control traffic to malware websites, which may attempt to send further instructions in continuation of an attack.

IBM QRadar® Security Intelligence Platform products provide a unified architecture for integrating security information and event management (SIEM), log management, anomaly detection, incident forensics, and configuration and vulnerability management. QRadar can detect threats that other technologies miss, by performing advanced analytics and by anomaly detection such as spotting traffic spikes on off-hours, or repeated login attempts, all across a wide range of data and network traffic. And it can deliver security intelligence on-premise, as well as in cloud environments.

IBM Security X-Force® Threat Intelligence uses the latest evolving information on potentially malicious IP addresses, including malware hosts, spam sources and other threats, to enable you to respond proactively.

IBM Fiberlink MaaS360 can help you balance engagement, productivity and data security by managing all your users, devices and data from a single console that provides instant visibility into who is connecting to your data and via which devices. With it, you can manage and secure all devices:

desktops, laptops, smartphones, tablets, and whatever comes next—including support for a bring-your-own-device (BYOD) policy for your employees.

IBM Endpoint Manager streamlines remediation tasks by automatically managing patches to hundreds of thousands of endpoints, including the latest mobile devices, and also by providing integrated reporting for real-time monitoring of patch progress.

Today, it is no longer a matter of whether an organization will be breached, but a question of when, and how much damage will be caused before an intrusion is caught and mitigated. You need the ability to respond extremely quickly once an incident is detected. The IBM Threat Protection System provides capabilities to quickly investigate breaches, and to retrace attack activity so as to learn from these findings and remediate weaknesses.

Understanding the magnitude and nature of a security breach can be challenging, especially with limited resources or a lack of in-house forensics expertise. IBM Emergency Response Services can supplement your in-house resources by providing immediate guidance and support in the event of a serious security incident.

Selected IBM Offerings

Software solutions

• IBM InfoSphere Guardium®

• IBM QRadar Security Intelligence Platform

• IBM Trusteer Apex

• IBM Security SiteProtector™ System

• IBM Network IPS

• IBM zSecure™ Suite; IBM InfoSphere Guardium Database Activity Monitoring

• IBM InfoSphere Guardium Encryption Expert

• IBM Tivoli®

• IBM Endpoint Manager

• IBM Security AppScan®

• IBM QRadar Security Intelligence Platform

Consulting, Process and Implementation services

• Database Vulnerability Assessment

• IBM Cybersecurity Executive Awareness Briefing

• IBM Security Maturity Benchmark Assessment

• IT Security Services for: Cloud, Application, Data, Emergency response, Identity and access management

• IT Risk, Security consulting, governance and compliance

• PCI Security

Managed services

• Cloud Offerings (SaaS, BPaaS, PaaS, IaaS)—SoftLayer

• Outsourced or Managed Security Services

• IBM X-Force

• Surveillance Application (GTS)

• IT Managed Services: security, mobile, network

• IBM Threat Protection System

• IBM Emergency Response Services

Infrastructure

• IBM SoftLayer

• IBM POWER8™, System x, System z

• PureData for Analytics

• For storage: IBM DS88xx, IBM XIV®, IBM Storwize®

Case studies

This retailer suffered a damaging outage that interrupted their business in 2012. An issue was their reliance on infrastructure that lacked appropriate security controls.

• IBM Security Services evaluated their environment and recommended Geni Networks Genian NAC software to guard against viruses and malevolent network traffic, as well as Symantec Data Loss Prevention software to protect critical information

• By establishing more effective endpoint controls and safeguards for data, this retailer has significantly reduced the risk of business interruption, as well as the risk of a serious data breach

This retailer sought to provide security services to their internal customers and to third parties while reducing overall costs.

• IBM Managed Security Services delivered a turnkey solution that includes IBM firewall management, intrusion detection and prevention, SecureWeb Gateway, and X-Force Threat Analysis, plus technology from Cisco and BlueCoat

• These services are being provided under a single contract, with migration services and managed security services, which reduces transition and implementation time significantly and provides a single point of contact for all network security-related components

This retailer implemented role-based user access controls to facilitate the conduct of business while safeguarding data.

• IBM Security Identity Manager, in conjunction with IBM WebSphere, provides user access controls for its internal employee portal to create a single sign-on, personalized work environment

• Individual access rights are automatically updated as roles change and as employees are on- and off-boarded, and each person’s use is recorded to ensure audit-readiness and compliance with security standards

• Solution helps facilitate and streamline the functioning of the business, while at the same time restricting access to sensitive data to those having verified and legitimate purposes.

A South Korean multi-channel retailer A European retailer A multinational

supermarket chain

18 1918

Please Recycle

REB03013-USEN-00

IBM’s commitment to the retail industryIBM has more than 4,000 professionals focused on the retail industry around the world as well as one of the largest global networks serving retail, with almost 2,000 IBM Business Partners.

IBM’s preeminence in the development of leading industry solutions is the direct result of our strong commitment to research and development. We invest more than USD6 billion annually in R&D, and for 21 consecutive years have been the world’s leading patent-earning organization. IBM earned 6,809 patents in 2013 alone.

We are proud that our efforts to make the world a safer, cleaner and more prosperous place have led us to spearhead our series of IBM Smarter Planet® initiatives:

Smarter retail IBM’s initiative to drive improvement in the retail industry

Smarter Commerce IBM’s initiative to drive improvement in digital commerce across multiple industries

Smarter Analytics® IBM’s initiative to drive improvement through the use of advanced analytics across multiple industries

SmartCloud IBM’s ecosystem of cloud solutions, which includes infrastructure as a service, software as a service and platform as a service offered through public, private and hybrid cloud delivery models

MobileFirst IBM’s initiative to transform retail operations with mobile enterprise solutions, and to transform the retail customer experience through mobile engagement that is enriched with analytics

Social business IBM’s initiative to embrace and cultivate a spirit of collaboration and community—internally and externally—to deliver new levels of return and engagement

For more information For more information on any of the solutions described in this solution guide, contact your local IBM representative or visit ibm.com/retail

© Copyright IBM Corporation 2015

IBM Corporation Sales and Distribution Group Route 100 Somers, NY 10589 Produced in the United States of America January 2015

IBM, the IBM logo, ibm.com, Smarter Planet, Let’s Build a Smarter Planet, the planet icon, Made with IBM, cognos, Watson, PureData, InfoSphere, BigInsights, PureSystems, SPSS, DB2, Informix, IMS, Global Technology Services, Global Business Services, Power Systems, Smarter Commerce, DemandTec, Emptoris, Bluemix, SmartCloud, WebSphere, Cloudant, Tealeaf, Worklight, QRadar, X-Force, Guardium, SiteProtector, zSecure, Tivoli, AppScan, POWER8, XIV, and Storwize are trademarks o IBM or other companies. A current list of IBM trademarks is available on the web at “Copyright and trademark information” at ibm.com/legal/copytrade.shtml

Netezza is a trademark or registered trademark of IBM International Group B.V., an IBM Company.

Sterling Commerce is a trademark or registered trademark of IBM International Group B.V., an IBM Company.

Softlayer is a trademark or registered trademark of Softlayer, Inc., an IBM Company.

Fiberlink and MaaS360 are trademarks or registered trademarks of Fiberlink Communications Corporation, an IBM Company.

Trusteer Apex is a trademark or registered trademark of Trusteer, an IBM Company.

This document is current as of the initial date of publication and may be changed by IBM at any time. Not all offerings are available in every country in which IBM operates.

The client examples cited are presented for illustrative purposes only. Actual performance results may vary depending on specific configurations and operating conditions.

THE INFORMATION IN THIS DOCUMENT IS PROVIDED “AS IS” WITHOUT ANY WARRANTY, EXPRESS OR IMPLIED, INCLUDING WITHOUT ANY WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND ANY WARRANTY OR CONDITION OF NON- INFRINGEMENT. IBM products are warranted according to the terms and conditions of the agreements under which they are provided.

The client is responsible for ensuring compliance with laws and regulations applicable to it. IBM does not provide legal advice or represent or warrant that its services or products will ensure that the client is in compliance with any law or regulation.

20