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Nestlé builds 'digital ecosystems' to transform its massive bottled water biz

Time will tell if ReadyRefresh — Nestlé’s makeover of its century-old bottled water delivery business — becomes the UPS, Amazon or Uber of its industry. But these are the companies that have created the “digital ecosystems” Nestlé needs to master in order to meet changing customer expectations, said Aymeric Le Page, vice president for business strategy and transformation at Nestlé Waters North America.

“Customers are not just comparing us with other delivery companies; we are now being compared to everything you have on your phone. We are compared to Seamless,” Le Page said at the recent Digital Strategy Innovation Summit. Seamless is the online food ordering service that merged with GrubHub three years ago.

“It’s all about convenience,” Le Page said. Making sure a customer never ran out of water before the next company-determined delivery date was the old Nestlé’s service model. Digital titans like Amazon and UPS have raised the bar. “Now it’s, ‘Make sure you deliver what I want when I want it.'”

‘Your health, your home, your way’

Nestlé S.A. is the world’s largest producer of bottled water. Until recently, its bottled water unit has functioned as a business-to-business supplier, delivering 5-gallon bottles to large enterprises on a set schedule. Two years into its “digital transformation journey,” Le Page said Nestlé is using digital technologies — cloud, mobile, analytics, geolocation, the internet of things — to customize its business service and build a direct-to-consumer “healthy hydration” service targeted at households.

Your health, your home, your way is the slogan” for the consumer side of ReadyRefresh, Le Page said. “That represents a different way of doing business from, ‘I’ll come whenever I can to change your water bottles.'”

Thus, a new, user-friendly website — readyrefresh_main_logo“Just Click and Quench,” is part of the logo — aims to make it easy for customers to order and personalize deliveries: They can reschedule or add a delivery 24/7. The ReadyRefresh website also exposes customers to Nestlé’s full portfolio of bottled beverages, from Poland Spring and Perrier to Pellegrino and Pure Life, among others. Meanwhile, the company’s 2,100 trucks, which literally drive brand visibility while en route, use the latest in telematics to optimize those routes.

Le Page said the new business model connects Nestlé to three digital ecosystems — e-commerce, where Amazon leads the pack; logistics, where UPS dominates, and the lifestyle digital ecosystem, where he claimed there is “no current winner.”

Digital ecosystems change the operating model

“It’s a big change for a company that has been in business for 100 years with a very linear, simple operating model,” Le Page said. A big change in customer focus, and a big change for Nestlé’s some 300,000 employees. “You have to change the culture, the ways of working, change the mindset.”

LePage was talking to an audience of mainly digital strategists and mobile app developers, but it struck me that much of what he was saying was extremely relevant to CIOs — and not just because Nestlé is replacing its 30-year old legacy system with a new ERP to support these new digital ecosystems. Or, as Le Page said, because the company is adopting Agile to keep up with the 20 strategic initiatives underpinning its digital transformation and the more than 500 projects under way.

Information technology — the business of CIOs — has fundamentally changed customer expectations. Forward-looking CIOs have long recognized that IT can no longer be delivered on IT’s schedule. Today, as Le Page said, it’s all about make sure you deliver what I want when I want it. Like the nearly $100-billion Nestlé company, IT organizations everywhere should be thinking hard about how to do that.

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