British retailers are faced with challenges of operating in a world where technology is everywhere and bandwidth demands have never been higher. Our eBook explores how the high street should adapt to the online threat and looks at how network security, speed and resilience can enhance operational efficiency and customer loyalty.
Then measure your network’s performance using our Network Optimiser tool. We’ll not only rate performance, but also give a comparison against our industry benchmark and highlight improvement opportunities.
WHY CONNECTIVITY IS | MOVING UP THE AGENDA FOR BRITISH BUSINESS I TalkTalk Business You will find many big numbers in this eBook, but don't mistake it for another raft of Big Data predictions. These are numbers that matter in a very real and tangible way for Business Grade Britain. These are numbers that are compelling, frightening, exciting and daunting in equal measure. These are numbers that they are changing the way in which businesses and their IT functions behave and evolve. These are numbers linked to the creation and use of technology - today and into the foreseeable future. CONTENTS CONNECT FOR BUSINESS GRADE BRITAIN 3-5 8-9 10-11 12 Building a Business Grade Britain Manufacturing in the spotlight Retail under the microscope Finance in focus Connect for Business Grade Britain with TalkTalk Business Innovation - the lifeblood of the modern enterprise - is often, inextricably, linked to technology. Technology powers innovation and innovation powers industry. But what powers technology? The answer to that, in this digitally, Internet-enabled world, is of course... The Network. It's the reason why the UK government is ploughing five billion pounds into fixed and mobile network infrastructure. It's the reason why the Internet is worth £82 billion a year to the British economy. It'sthe reason whyfor every pound spent on Internet con nectivity, the cou ntry benefits by five pou nds. Most importantly, it's the reason why your business should be demanding-and benefitting from - a faster, leaner, more agile and resilient network. The evidence is compelling, so let's jump right in and see what the numbers reveal... 2 3 FROM DISCONNECTED TO CONNECTED Back in 1993, five years before Google was even born - the Internet comprised a mere 130 websites in its entirety. Not in the UK, not in Europe, but across the globe. Fast forward to 1996, still two years before Google was a twinkle in Larry Page and Sergey Brin's bright eyes, and 100,000 more websites came to be. Today, there are 3.6 billion indexed web pages... and counting. The Internet of things has become an incredibly, monumentally, scaled up entity - in a way that is barely comprehendible to practiced IT technicians, let alone business leaders. 2.5 billion people, or 47% of the global population, now use the Internet. In the UK, that ratio rises to 84% or 53 million of the 63 million within our resident shores. Speed, devices and data Internet traffic is expected to rise by an average of 37% every year, which means that by 2015 we will be producing 116,539 petabytes of data per month. The majority of this traffic, currently, runs on fixed networks, but mobile network traffic has been growing by 84%year- on-year. So, as Google runs over three billion web searches a day and 204 million emails are sent per minute, Internet speeds have risen to compensate. Luckily, in the U K, our average broadband speeds are increasing by 41% year-on-year. The average worldwide download speed is 2.9Mbps, compared to 7.9Mbps in the UK. However, this is only the twelfth highest in the world and by unhappy coincidence the UK has dropped from having the 9th biggest economy in the world to the 18th. Technologically, British businesses have been early adopters, but the rest of the world is catching up fast due to the relative lack of investment in network infrastructure and connectivity. It's become clear that the old network monopoly - privatised or not - has been holding Britain back, just at the time when the need for capacity, speed and security has never been greater. Business grade Britain needs an upgrade. TECH HEAVY, NETWORK LIGHT: BRITISH BUSINESS DESERVES BETTER According to a recent IBM survey, 75% of global CEOs believe that technology is the most important differentiator in business today. While this is music to the ears of ClOs, the business reality is that more than half of enterprises (51%) cite network performance as a challenge - up from 36% just two years ago, according to Cisco. Indeed, three out of five small business owners say that poor I nternet service adversely affects their ability to do business. Technology is both the cause and the solution, of course. As more firms switch to hosted platforms, embrace mobility solutions and eCommerce models, the common thread - network connectivity - becomes more vital and, at the same time, more vulnerable. But, ironically, in the rush to adopt technology, the very networks these technologies rely upon have become starved of adequate investment and strategic prioritisation. Unified Communications The pessimistic would say that there are no silver linings without clouds. A recent survey of U K firms bears this out with 59% of those polled saying that they offer teleworking to employees - up from 13% in 2006. However, a Yahoo study has revealed that: "speed and quality are often sacrificed when we work from home." Telepresence, as a sector, is expected to grow by 20% in the next five years. The global video conferencing industry is forecast to be worth £2.3 billion by 2016 and the UK's share of that market will rise by 12% over the same period to£123million. However, high costs, poor video quality, tough usability and a lackof scale to mobile devices have dogged widespread adoption. 18% of global businesses surveyed by Cisco say video conferencing is unreliable and a further 21% say that insufficient broadband infrastructure is the main barrier to adoption. D Digital wallets Security Hosted eCommerce isa hostage to fortune too - promising much, but crippled by insufficient network reliability and security. The value of B2B eCommerce in the U K is already triple theglobal average, in GDP terms. By 2020, there will be trillions of sensors feeding data across the Internet, recordingeverythingfrom people's movements to what they have just bought. Yet cyber crime and espionage will rack up between 300 billion and one trillion dollars of annual, global losses. Almost two-thirds of companies surveyed by Oracle plan to boost spending on IT security in 2013/14.66% believe they apply an "inside-out" strategy designed to protect the networking layer. But 40% of organisations have an "unbalanced" and "fragmented" approach to application and data security and more than a third say they increase spending based on news reporting and "sensational sources", rather than internally-identified organisational risks. Cloud isa £100 billion industry accounting for 25% of total IT spend, but 70% of businesses, say that most of their downtime is caused by migrating data between physical and virtual environments. Much of this migration process and the consequent deployment of hosted applications will stand and fall on basis of the network performance, or those operating it. With that in mind, isn't it about time businesses were doing and demanding more from their network providers? WANT MORE? TAKE UP THE CRY FOR BUSINESS GRADE BRITAIN Brand and sales With the network at the core of your business, you can not only do more but create more. It's no accident that the top three companies in the world, according to their brand value, are technology firms (Apple, Google, IBM) with network-based technology - directly or indirectly - at the heart of their commercial success. For them and most other enterprises, more brand visibility - powered by digitally driven communication - breeds more customer sales, brand loyalty and advocacy. Service and support 70% of the B2B buying cycle is now completed online before contact with a salesperson is made. In the consumer environment, when a customer's problem is not resolved on the first call, only one percent is likely to try a competitor. Online, a huge15%of visitors willseek out an alternative supplier. A connected business makes for better connected customer services. Services that are delivered through mobile, wireless, Bluetooth and multi-channel marketing. Motorola reports that 56% of retailers will provide guest Wi-Fi by 2017, so it finally appears that the ambivalent attitude to showrooming is beginning to dissipate. Convenience and commerce Giving customers what they want, when they want it is the name of the game - it was ever thus, but technology now means that services must be accessible, always-on, intuitive and efficient to use. One only has to look at online payment handler, PayPal as evidence of the disruption taking place. In the first quarter of 2013 alone, the firm processed transactions worth £41 billion - a figure that no doubt puts the fear of God into those operating on outdated, high- street banking models. Reliability and resilience But maybe your business model needs more network performance too. Performance that gets more out of your core assets-your people, processes and technologies. 80% of data centre managers polled in a recent survey reported downtime costs of more than £30,000 per hour. For over 25%, that figure rises to an eye-watering £300,000 per hour. A secure network, therefore, makes for a secure business. Security that is built into the network, rather than the device or application is crucial. 76 percent of businesses say they feel at risk as a result of BYOD, while 84% of ClOs confess that their IT departments are incapable of supportingall existing business applications. Security that supports agile, efficient and flexible cloud solutions is becoming increasingly vital. 78% of U K IT managers are concerned about how to migrate to online services securely, while over half say that a fully outsourced managed security service is required to support the roll out of cloud technologies. With all of these factors at play, it's clear that a strong network makes for a strong business with strong connections between people and places. The ability to leverage and maintain a strong record on network uptime-with high levels of coverage, availability, speed and resilience - is what separates the great from the good. 5 MANUFACTURING ECONOMIC POWERHOUSE TalkTalk Business For a nation that has gravitated heavily towards tertiary, service-led industries, some may find it surprising that the UK's manufacturing sector is more than holding its own. Despite the rise of cheap, overseas labour, the increasing burden of EU bureaucracy and the global liquidity crisis, manufacturers are holding up rather well. Compared toother Western nations, British manufacturing is performing admirably. While many rightly point towards Germany as engineering powerhouse with the ideal manufacturing model, it should be noted that the UK is not far behind in terms of its contribution to Gross Domestic Product. In fact, Britain's factory output is on a similar level to France and larger than the United States, relative to GDP. With 2.5million people employed across the industry, contributing £140 billion of trade and 50% of all exports - manufacturing is the third largest sector in the U K economy. It's also responsible for 74% of all business-related R&D, which is essential to keeping the UK ahead of the game. British manufacturers have a world-class reputation in the automotive, aerospace, chemicals and beverage sectors. That's why eight of the globe's top car brands manufacture in the UK, along with the world's second and third largest pharmaceutical firms and three of Download our Manufacturing the planet's biggest brewing companies. infographic for an industry overview Powered by innovation Innovation, of course, is at the heart of our manufacturing model. It's why the UK has set its stall by advanced manufacturing- rather than trying to compete head-on with low-cost, developing countries. As evidence of this, 73% of UK producers intend to bring new products to market within the next three years and 71% are also planning to use these developments in order to break into new export markets. Three quarters of U K manufacturers say speed to market is more important than it was in the past, so it's not just about innovation, but the pace of innovation. That's why two thirds of firms intend to collaborate with a research institution and over half of will do so with overseas organisations. Even SMEs are getting in on the act -a third of manufacturers with fewer than 100 employees are looking to collaborate with foreign institutions in order to drive innovation. Powered by the network But what will that innovation look like? And how will it manifest itself? Studies have shown that 46% of the global economy could benefit from the industrial internet or, as Cisco describes, "The Internet of Things". McKinsey Global Institute estimates that the potential economic impact of the Internet of Things to be $2.7 trillion to $6.2 trillion per year by 2025 with two major sectors to benefit the most - healthcare and manufacturing. In practical terms, this will mean that manufacturers begin to generate revenue through machine-to-machine communications (M2M) - whereby a remote network of machines, devices or appliances can be connected in ways that encourage improved data transmission, process monitoringand industrial automation. With IP-enabled networks permitting M2M to occur anywhere in the world, in one or many sites, the process will help to reduce the amount of power and time necessary for information to be communicated between machines. Hence, improved productivity and innovation opportunities. 40% of manufacturers expect to generate revenue directly from M2M, compared to an average in other industries of 31%. And this is because it isn't just about adapt existing processes and products, but also coming up with new solutions and more efficient production methods. So, technology is driving manufacturing and innovation, but who is driving the uptake of technology? 87% of best in class manufacturers more likely than their competitors to make network decisions at the corporate level and, as a consequence, the most advanced manufacturers will experience less downtime. Data shows that tech-driven manufacturers will experience an average of three hours of downtime per year, compared to 75 hours for those grouped as "laggards". THE POWER OF SUPPLY CHAIN RISK MANAGEMENT Intelligent technology will empower manufacturers to react faster to disruptive events by monitoring risks, identifying alternative suppliers and helping to plan mitigation strategies collaboratively. PLUG AND PLAY MANUFACTURING Imagine connectinga new plant to headquarters injust a few weeks, rather than having to go through a year-longon-premise ERP implementation - the cloud makes it possible and manufacturers setting up shop in emerging economies will make the most of it. MOBILITY CREATES A REAL-TIME ENTERPRISE From design to production to sales, mobility will promise the digitised workflows and real- time operation process visibility into operational manufacturing intelligence- taking it away from the desk and into the hands of each employee. MORE BANG FOR THE SOCIAL BUCK So, what does the future look like? Which trends will advanced manufacturers be looking to exploit? Here are five predictions from Infosysthatyou should keep an eye on: Manufacturers will capitalise on social media investments by using it as a collaborative tool - one that connects experts to solve problems, gathers more business intelligence and connects the enterprise with end users for new product / process ideas. MINING BIG DATA FOR NEW MEANING Say goodbye to discarding data because you can store or process it - big data will help collect information on manufacturing processes down to the last detail and translate it into actionable insights. D TalkTalk Business THE CHANGING FACE n| I I I II ^^^M Download our Retail infographic for an industry overview The retail sector has come a long way technologically but it's still, largely speaking, a conservative, slow-moving adopter of digital innovation. Faced with numerous threats - not least from online traders - the high street has been reactionary rather than proactive in tackling the showrooming phenomenon. That is until now. Merchants are gradually beginning to grasp the nettle and realise that technology is cause for celebration - not merely consternation. Since Sainsbury's opened its first self-service supermarket in 1950, bricks and mortar retailers have focused on deliveringgreater choice to the consumer. But the retail model has actually changed very little since that period. Despite the fact that home shopping was invented in 1979, it took until 1998 - some 19 years later for a mainstream grocer (Asda) to launch a home shopping service. Today, 15 years on, 1 in 20 of Asda's online orders are collected from store. Coupled with this, competitors such as Tesco are looking at new operating models. I n August 2012, the retailer launched the U K's first interactive virtual grocery store at Gatwick airport. Customers use a barcode scanningapp, on their smartphone, which they point at the image of an item on a virtual fridge. It then gets added to a shopping basket and delivered to the customer's home when they return from holiday. This underscores the belief that the virtual and physical shopping experience is converging in ways that were once considered unthinkable. The question for retailers today is how they find the right balance between their online and offline offer, when consumer habits and technologies are changing all the while. Asa measure of the dramatic changes that have already taken place, consumers spent £78bn at online retail stores in 2012, up 14% on the previous year. In 2010, sales via mobile devices represented just 0.4% of all online spend, compared with 13.2% in 2012. However, some of the old problems still persist. UK retailers lost £147 million of revenue during Christmas 2012 due to out-of-stock products. Just over half (52%) blamed lack of stock for loss of sales, a similar number attributed it to IT order fulfilment issues and almost a third confessed to human processing errors. So, while technology presents significant opportunities for high street and online retailers, it's clear that having adequate infrastructure in place to support these developments is vital. Two worlds collide Seven out often enterprises have a website, but only one in ten sells on the web - according to industry data. It's also estimated that retailers failing to engage customers through digital channels are missing out on £12bn of sales. That's because 50% of all sales are now influenced by digital. However, 90% of consumers are frustrated with how retailers use digital channels, which is not altogether surprising when you consider that 20% of high street retailers don't have mobile optimised websites. To further underscore the issue, sales conversion rates for mobile are now 2.3% of consumer browsing, compared to 4.6% for e-retail. So, despite the fact that the U K has the highest digital revenue per capita in Europe (in digital downloads and in online retail sales), consumers are left wanting more. 6% of smartphone and tablet owners (68%) have attempted to make a purchase on their device, yet two thirds of all retailers' shopping carts are abandoned. Tackling this issue is important when you examine the growing value of online derived sales. The'click and collect' model represents over 70% of online sales for Argos - the first major retailer to adopt the model - while other market leaders reap major rewards too. 20% of John Lewis and Halfords sales are earned through this channel, so the marrying up of the online and in-store experience is crucial. Security is a major issue for the retail sector too, which suffers twice as many web application attacks as other industries. As a measure of the impact, the average attack lasts for 22 minutes, while the longest attack ever recorded lasted more than 9 hours. Technology, therefore, needs to be considered from every angle - not just from the point of view of attracting sales. 1 BEYOND THE 'SHOWROOMING' PHENOMENON According to industry reportsthe UK will have the largest online retail penetration in the world - 26% - by 2025. In leading markets like the United States, nearly 25% of retail will be online. Those are particularly imposing figures when viewed alongside the predictions for global online retail revenues - which are forecast to reach $4.3 trillion by the same year. To put that into context, this will account for nearly 20% of total retail sales. By this point every retailer is likely to have adopted an integrated virtual and bricks and mortar retail model, which is designed to support a monumental movement towards mobile, tablet and phablet-based shopping. Studies suggest that there will soon be 200 million connected devices in the U K and one in four British citizens will be shoppingonline - the highest number in the world, per capita. The value of transactions made via mobile payment using NFC technology will reach 42.3 per cent in 2015. And, who know what payment models are coming next. Technology is advancing, but can retail keep up? The consequences are obvious for the laggards on the high street, but also for the online-only operators that may not be investing sufficiently in their network infrastructure to support the proliferation of devices, bandwidth requirements and growing cyber threats. FINANCE IN THE TalkTalk Business SPOTLIGHT In the UK, finance accounts for a large portion of the national economy - despite the global economic slowdown and reputational hits that have impacted banking. The number of businesses involved in this industry is extraordinary - particularly given the massive concentration of operators in one city. 34,000 UKfirms provide financial services (banking, insurance and financial advice) and a further 37,000 businesses provide accountancy services (audit, assurance, tax and advisory services). Irrespective of the ills some areas of the market have encountered, research shows that 65% of consumers trust their bank. At first glance, that may not sound like a ringing endorsement, but consider the vote of confidence in other firms such as online retailers (36%), insurance companies (34%) and, worst still, supermarkets (24%). However, if there's an industry that could rival - or even surpass - retail for technology conservatism, it's the financial sector. That's despite the fact that the banking sector will spend $184.7 billion on IT by 2014. The question is, of course, will this spending be in the right areas? Digital wallets The mobile wallet is one of the most significant - if not the most critical - developments impacting upon the entire banking sector. Faced with the threat of online payment competitors, such as Google and PayPal, the high street brands have been caught napping. So, rather than taking the opportunity to reinvent the traditional banking model, these sleepinggiants have chosen to merely adapt existing systems and processes - with limited success. The demand for more flexible, mobile-based banking is there. More than 50% of UKsmartphone users are buying items with their devices, but almost 60% would feel more confident doing so if they could use an app provided by their bank. Coupled with this, 75% of consumers want the online banking experience to be tailored to their device with 60% of tablet owners preferring a tablet for mobile banking, rather than mobile. Figures show that one billion mobile phone users will have used their device for banking purposes by 2017, but today the experience is largely restricted to basic functions such as statement checking and internal transfers. By the end of 2013, Europeans will complete more than 52 million contactless transactions every month, but the question is who will be processing them? The monopolies high street bands have previously enjoyed need no longer apply and we are likely to see a new wave of competitors take a growing share of the digital wallet. Those firms are likely to be the online payment handlers we've previously mentioned, plus a raft of phone networks and handset makers that have already established brand and commercial relationships with the connected consumer. Download our Finance infographic for an industry overview 10 Bankers beliefs So, how is the banking industry fighting back? What methods of attack are likely and what are the key trends going forward? 70% of those within the traditional banking sector believe that mobile and online channels are the most important areas to invest in, which underpins the significance of the threat but also the industry's recognition of the solution. 93% of banks claim they intend to offer mobile payment services, while 89% plan to offer bespoke tablet banking applications to customers in the next three years. This is mainly being driven by five key trends. Firstly, theconsumerisation of technology - which is increasingly blurring the lines between our personal and professional lives. The growth of devices and applications that meet our needs at work and play means that brands, including banks, have many more opportunities to interact with the consumer. Mobile payments is a feature of these interactions and we may see that banks extend their relationship beyond the transaction model to encompass services such as loyalty schemes to ensure that their app is preferred over a competitor's for making payment. In addition, banks are likely to enhance their cross channel experience using technology to drive customer service improvements. Examples include virtual finance advisors that search for local deals, recommend spending limits and arrange short-term overdrafts. The bank manager in your phone is not such a far away concept. Bigdata isalsodrivingoperational changes in the finance sector. As more consumers use online channels and digital devices, more information on those customers habits, preferences and dislikes builds up. All of this is vital market information will power banks - and other firms - products, services and offers to customers and prospects. Linked tothis, real-time bankinganalytics can be used to target consumers with precision and immediacy. So, as a consumer enters a store - connects to the Wi-Fi and applications hosted on the device - banks will be able serve up information that will help their customer make informed choices based on a range of factors - not least their current financia position. The possibilities are endless and the finance sector is only just beginning to scratch the surface. Safe and secure As we've learned in the other sections of this eBook, the adoption and application of technology is only one end of the bargain. Ensuring that resilience is built into the network to support these devices, tools and applications is every bit as important. Currently, 40% of banking budgets are set aside for compliance projects. In IT, a key enabler of such work, investment is most likely to focus on four key areas. 1. Data storage and retrieval technology 2. Real-time analytics 3. Complex event processing 4. In-memory databases grids i The huge level of investment is not surprising when you consider that nearly a quarter of the world's banks have been hit by security breaches in the last 12 months. Indeed, the average finance industry fraud goes undetected for 32 months (over 2.5 years), which could lead to huge commercial and reputational losses. Consumers are perhaps less brand loyal than in the past - and no sector can escape this trend - but more than one-third are willing to pay for advanced security features such as biometrics, to protect their data and finances. So, it's not all a one way street. Moreover, nearly 30% of consumers are also willing to pay for mobile payment capabilities. With technology advancements like Apple's fingerprint recognition feature on the iPhone coming to the fore, banks are pushing at an open door. But how fast the industry walks through is another question altogether. CONNECT FOR BUSINESS GRADE BRITAIN WITH TALKTALK BUSINESS British businesses underestimate the importance of the connectivity at their peril. The demands on the network are growing due to the increase in bandwidth hungry technologies, devices and content. For those businesses looking to gain competitive advantage, having the right technology and infrastructure to support these trends will be key. Failure to meet the grade can lead to security, speed and resilience issues and, ultimately, to loss of business and brand reputation. We've got Britain covered with the UK's largest all-IP network, so we are in a privileged position to help get your network into shape. We believe British Businesses deserve better, that's why we're on a campaign to ensure that British businesses have the business grade connectivity they need to support their growth. RISE UP FOR BUSINESS GRADE BRITAIN Connect to talktalkbusiness.co.uk/solutions/network and get your network back on track