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Reducing financial risks of climate change with advanced data and modeling

Franco Amalfi
22 Jan 2025

Capgemini Business for Planet Modeling uses the intelligence of Google Cloud capabilities to assess the impact of climate change on corporate financials and accelerate sustainable growth.

A 2023 study calculated that climate change costs the world $16 million per hour, with the global annual cost estimated between $1.7 trillion and $3.1 trillion by 2050. These costs include infrastructure, property, agriculture, and human health and they are expected to increase over time as climate change becomes more severe.

Big costs mean big impacts on the financial services industry. Banking, asset management, and insurance companies are facing increasing financial risks due to climate change. Understanding climate shifts has become essential to assessing their financial impacts, and the physical risk on banking and insurance portfolios. But there are a huge number of data points to consider at macro, sector, company and asset levels.

Failing to assess the impacts of climate risks could strongly undermine portfolio performance and competitiveness, especially when adding in the pressures from regulatory bodies to perform stress tests to model and mitigate the impact of climate change on financial services companies. These and other variables mean there is a need for reliable data and predictive models to make more informed business decisions.

The explosion of new technologies is transforming how we monitor Earth, presenting an incredible opportunity to better understand our planet. Thousands of satellites capture millions of images daily, and advanced sensors continuously gather data on temperature, precipitation, wind, and more-sometimes as often as every second. This unprecedented flow of information provides a comprehensive view of Earth’s systems like never before in history. By leveraging this vast and ever-growing amount of data, we have the potential to unlock critical insights that can empower decision-makers to address climate change more effectively and shape a sustainable future.

A different modeling approach

Most financial services institutions struggle with the complex data integration needed for modeling to assess how global variables like economy or energy evolution may be interconnected with climate change. To increase performance and competitiveness, the financial services industry must transform its approach to climate risk modeling. It needs to embrace new scenario generation capabilities and connect macro variables with granular asset-level risk assessment to produce financial statements that consider climate impact.

To help financial institutions overcome these challenges, Capgemini has developed Business for Planet Modeling (BfPM), a set of climate risk technology and advisory services built on the strength of Google Cloud and its partners. The solution embraces the power of Google Cloud’s geospatial analytics and artificial intelligence to simulate the financial impact of transition, the physical risks of climate change and global variables to enhance forecasting and support better decision-making to reduce risks and uncover new opportunities.

Unlike conventional methods, BfPM combines a holistic and granular analysis of climate risks, including those related to energy transition, leveraging extensive geospatial data and digital twin technology to stress-test scenarios. Additionally, BfPM’s customizable and scalable solutions seamlessly integrate into existing systems, enhancing forecasting capabilities, reducing risks, and accelerating the sustainability journey, ultimately leading to better financial and environmental outcomes.

We collaborate with Google Cloud and its partners to leverage Earth observation technologies in Google Earth Engine, Big Query, and Vertex AI, to understand their impact on physical assets. This partnership leverages 300 models and more than 265,000 variables to enable continuous climate risk monitoring and impact assessment. We aggregate and harmonize data from multiple sources, applying climate data science and machine learning on Google Cloud to deliver insights in Google Looker.  

“At Google Cloud, we are dedicated to leveraging our advanced technologies to drive sustainability and address climate change. By integrating our geospatial analytics, Vertex AI, and Earth observation technologies, we empower organizations like Capgemini to bridge the gap between corporate financials and climate impact. Together, we can create innovative solutions that not only mitigate financial risks but also promote sustainable growth and a healthier planet.”

Denise Pearl, Global Partner Lead, Sustainability and New Energy, Google Cloud

Designed to be secure and scalable, BfPM integrates into existing systems, providing easy access to rights management and a user-friendly environment. It harnesses the power of structured and unstructured data and insights to help accelerate the sustainability journey, reduce risk and unlock new opportunities to enhance returns.

How BfPM is different

Capgemini’s Business for Planet Modeling (BfPM) for Financial Services stands out by offering platform-based climate risk modeling services to address all use cases for financial services institutions’ including: climate stress testing, scenario analysis, financial planning, sustainability reporting, equity and loan portfolio management. By leveraging the power of Google Cloud’s analytics and AI, BfPM enhances the risk management and forecasting capabilities of financial institutions, enabling them to better understand and mitigate climate risks.

Key features and benefits:

  • Integration services: BfPM services leverage an extensive ecosystem of specialized partners to integrate the best climate risk modeling solutions that will augment existing risk management tools for better business decisions.
  • Integrated assessment models: BfPM uses a reliable and open-source integrated assessment model (IAM) to generate climate-influenced financial statements and financed emissions projections that will help drive portfolio transition and higher returns.
  • Hybrid approach: by combining global variables such as economy, climate, energy, and carbon taxes with asset-level physical risk analysis, BfPM provides a holistic view of potential impacts on financial statements for equity and loan portfolios.
  • Strategic digital twins: utilizing digital twin technology, BfPM can augment climate stress-testing capabilities and benchmark future business states against climate scenarios. This includes reliable forecast and models on climate, economy, energy, and planetary boundaries, ensuring secure and accurate simulations.
  • Granular data analysis: by leveraging Google Cloud’s extensive data and partners, BfPM pinpoints the geolocation of all assets and analyzes the evolving impact of physical risks on them. This granularity allows for detailed market segment and asset-level analysis, making climate risk actionable.
  • Customizable, scalable & modular solutions: designed to be secure and scalable, BfPM integrates seamlessly into existing systems. It simplifies the integration process, provides auditable outcomes and enhances returns.
  • Advanced scenario generation: BfPM generates scenarios that integrate global variables and assess physical risks based onCoupled Model Intercomparison Project Phase 6 (CMIP6) data. Using NGFS and tailored scenarios co-developed with banks, it simulates climate change impacts on equity and loan portfolios, providing essential key performance indicators (KPIs) for risk executives.

By combining these advanced features, BfPM empowers financial organizations to dynamically analyze business scenarios and plans. This not only supports sustainable transformation but also enhances profitability while reducing the carbon footprint.

Authors

Franco Amalfi

Director, Sustainability Strategic Initiatives and Partners – Americas
Accomplished professional with extensive experience, spanning sustainability, strategy definition, value selling, management consulting, software development, software implementation, and business development. Experienced in multiple industries; have worked with consumer products, financial services, government, telecommunications, high-technology, pharmaceutical and retail companies.

Edouard Le Bonté

Sustainability Banking & Capital Markets Portfolio Head
Edouard leads the development of Capgemini’s sustainability services for Banking & Capitals Markets institutions. He works closely with global executives to accelerate their net-zero transition through enhanced climate risk modeling. He combines a deep sustainability expertise with extensive knowledge of financial services’ strategy, portfolio development and risk management.

    Featured solution

    Business for planet modeling with Google Cloud

    Capgemini and Google Cloud enhance climate risk analysis for financial services, leveraging AI to boost sustainability, reduce risk, and improve returns.

    Cybersecurity 2025: Embracing resilience in an era of disruption

    Marco Pereira
    Jan 20, 2025

    As we usher in 2025, the cybersecurity battleground has never been more complex. New technologies bring transformative opportunities, yet they also open the door to increasingly sophisticated threats. For business leaders, the mission is clear: anticipate risks, adapt to challenges, and take decisive action to build continuous resilience.

    Here’s a closer look at the key cybersecurity trends shaping 2025, and how organizations can stay ahead in the face of tomorrow’s threats.

    Quantum computing: A new frontier for security challenges

    Quantum computing is no longer a distant dream but an emerging reality with profound implications for cybersecurity. Its potential to break traditional encryption methods threatens the foundations of secure communication and the digital economy. With the quantum computing market projected to reach $5.3 billion by 2029, the urgency for organizations to act has never been greater. Organizations must proactively adopt a flexible and resilient cryptographic approach, transition to post-quantum cryptography, and revamp their cryptographic protocols to remain secure in this new era. Embracing quantum-safe encryption today is the only way to safeguard tomorrow.

    AI and machine learning: A double-edged sword

    Artificial intelligence (AI) and machine learning (ML) continue to revolutionize cybersecurity, enabling faster, more accurate threat detection and response. However, these same tools are being weaponized by adversaries, creating a new breed of AI-driven attacks such as advanced phishing campaigns and deepfake scams. According to our latest Capgemini Research Institute (CRI) report, 55 percent of organizations are already prioritizing Gen AI to advance their cybersecurity.

    To stay ahead, organizations must adopt AI-enabled solutions, not as a luxury but as a necessity. Balancing the benefits of AI while preparing for adversarial uses is critical to staying resilient in this rapidly shifting battlefield.

    The zero trust imperative: Continuous resilience in a borderless world

    “Never trust, always verify” is no longer a buzzword; it’s a cornerstone of modern cybersecurity strategy. As remote and hybrid work become entrenched in our business models, the zero trust framework is critical to securing every interaction – inside and outside the organization. By 2025, Gartner predicts 60 percent of enterprises will have embraced zero trust architectures.

    For leaders, this means adopting a zero trust framework isn’t just about enhancing security; it’s also about enabling agility and maintaining business continuity in a perimeterless world.

    Privacy and compliance: Navigating a regulatory landscape

    As public scrutiny and governmental regulations around data privacy intensify, compliance has shifted from being an operational challenge to a reputational imperative. By 2032, the global data protection market is set to reach $505.98 billion.

    Stay ahead of regulatory changes and use compliance as a differentiator. Transparency and robust data handling can build trust and set you apart in a crowded marketplace.

    Ransomware’s growing shadow

    Ransomware is evolving beyond encryption threats. Today’s attackers weaponize data, leveraging extortion tactics that combine encryption with public data leaks. With ransomware costs projected to hit $71.5 billion by 2026, it’s clear this is no longer just an IT problem – it’s a business risk.

    Beyond technical defenses, build a culture of readiness. Incident response plans, cross-functional drills, and employee awareness are your frontline defenses.

    Evolving security operations: The hyperautomated intelligent Security Operations Center (SOC)

    As threat actors become more sophisticated and early adopters of automation and AI increase the speed, reach, and depth of their attacks, organizations must raise the bar in their security operations.

    With more solutions running in the cloud, leveraging bidirectional API connections to automate hundreds or thousands of playbooks has become imperative. Additionally, security orchestration, automation, and response (SOAR) systems are evolving to automate complex tasks such as phishing takedowns, vulnerability patching, and malware analysis.

    Moreover, AI can be used to substantially remove false positives and improve context during an incident investigation, increasing the productivity of SOC analysts and reducing alert fatigue.

    2025: An era of disruption and opportunity

    Cybersecurity in 2025 is about much more than mitigating threats – it’s about embedding resilience, innovation, and trust into the core of your organization. It’s a business enabler, a trust builder, and a critical competitive differentiator.

    The path forward requires bold decisions, strategic investments, and a commitment to staying ahead of an ever-evolving threat landscape. Continuous resilience is no longer a choice – it’s a strategic advantage.

    Let’s shape the future of continuous cyber resilience, together.

    Author

    Marco Pereira

    Global Head of Cybersecurity, Cloud Infrastructure Services
    Marco is an industry-recognized cybersecurity thought leader and strategist with over 25 years of leadership and hands-on experience. He has a proven track record of successfully implementing highly complex, large-scale IT transformation projects. Known for his visionary approach, Marco has been instrumental in shaping and executing numerous strategic cybersecurity initiatives. Marco holds a master’s degree in information systems and computer engineering, as well as a Master of Business Administration (MBA). His unique blend of technical expertise and business acumen enables him to bridge the gap between technology and strategy, driving innovation and achieving organizational goals.

      Modern Bankers in an age of sustainable banking: Three takeaways

      Diederick Levi
      Jan 15, 2025

      Banks play a pivotal role in the sustainability transition. A bank needs to align their strategy with clients’ sustainability ambitions, and bankers need to provide tailored sustainability advice and efficiently gather essential sustainability information. Bankers need support and clear guidance to navigate these new responsibilities. Capgemini offers expertise in ESG data management and sector-specific sustainability trends to make banks and bankers future ready.

      Banks play a crucial role in driving the sustainability transition. Their greatest influence lies in guiding clients towards adopting more sustainable business practices. By redirecting financial resources, banks can significantly speed up the shift towards a greener economy. Yet, to be able to double-down on this role, the financial business case needs to become clearer. Until now, sustainability has been a regulatory-driven and mainly considered as a cost driver.

      The business case can be made: with the market for sustainable finance products expectedly growing from 5.4 trillion now towards $31.1 trillion in 2032, the sustainability transition offers a great opportunity for banks. A bank committed to sustainability must understand the clients that drive this growing demand. Bankers, being the main connection between the bank and the client, will be key to understand these clients.

      Banking will become more multi-faceted, and more complex. Before, a banker could focus on core banking parameters, such as cashflow and collateral. Now, additionally, they need to advise clients what it means to transition to a sustainable future, how to integrate sustainability best practices and accurately report on mandatory ESG disclosures. In this article, we address three important sustainability related focus points for bankers. We believe that taking these client focused considerations into account, leads to a positive business case for sustainable finance. The focus points are:

      1. Bankers need to understand the clients’ sustainability ambitions to align with the bank’s strategy
      2. Bankers will have to offer tailored sustainability advice to clients
      3. Bankers need to effectively gather essential clients’ sustainability information in a non-invasive way

      In the rest of this article, these focus points are explained in more detail.

      Bankers need to understand the clients’ sustainability ambitions to align with the bank’s strategy

      Many bankers already have sustainability related conversations with their clients. Each client is unique; some clients have significant sustainability ambitions, and some are happy with the way things are going now and are reluctant to change. If a bank has an ambitious sustainability strategy, it is important that it attracts clients that have an aligned ambition. Such ambitious banks shift their focus from the ‘traditional creditworthiness view’ towards a new balance, where the clients’ sustainability ambitions and actions are also considered.

      At Capgemini, we developed a simple matrix to show this shift. We combine two important variables when it comes to the bank-client relationship towards sustainability. We take the traditional creditworthiness of the client[1], and combine it with the ‘sustainability ambition’. These sustainability ambitions are the eagerness of the client regarding making a sustainability transition[2], and is placed on the x-axis in the figure below.

      We classify clients on this axis and divide them into a matrix. This helps decide which client type the bank should focus on, and which approach to take for existing clients.

      If a bank itself has high ambitions regarding sustainability, it wants to have equally green clients in their books, whilst ideally also being highly creditworthy.

      For the sake of grouping them, we have named the high creditworthy and sustainability ambitious clients “Superstars”. Less creditworthy but ambitious clients we call “Idealists”. High creditworthy, but low ambitious clients are “Grey Geese”. If they are neither willing to be sustainable, nor sufficient in their creditworthiness, we call them “Strugglers”.

      Of course, all banks with an ambitious sustainability strategy would rather have the Superstars in their portfolio, meaning that there is high competition among banks to bring in these types of clients. When a bank not only wants to focus on this highly competitive client segment, it can also choose to focus on another segment. It can choose for the idealists, which have high sustainability ambitions, but a lower creditworthiness. In this case a higher risk acceptance might be warranted. Ideally, the bankers can push clients towards the Superstars quadrant by offering financial advice. In the same way, there are possibilities for green[3] banks to target Grey Geese. These grey clients can be persuaded by bankers to heighten their sustainability ambition.

      The best focus area for a bank is mostly dependent on the bank’s sustainability strategy but is also influenced by which type of client is most dominant in its current portfolio. An assessment should take place to find the sweet spot for the bank, and if a focus should take place on a specific client segment.

      Bankers will have to give tailored sustainability advice to clients

      Apart from understanding which client to focus on, acting upon sustainability ambitions is extremely difficult. Helping a client with their sustainability transition will be a new skill bankers have to develop. A banker needs to understand the financial position of a client and become versed in sustainability. Generally, they need to focus on three steps.

      1. The climate risks which the client is exposed to
      2. The latest sustainable sector developments for the clients they service
      3. Relevant sustainable banking products for the client’s situation

      Below examples of these steps:

      Climate risks

      A banker needs to understand the climate risk exposure of the client. This is to ensure the client’s business continuity in a changing climate. For example, a banker can point out that if a client has three textile suppliers that are all in the Bangladesh coastal region and deliver 90% of its inventory, more frequent and intensive flooding might be a business continuity risk. Another example is the risk that carbon prices are imposed or heightened for a relatively carbon intensive steelmaker. Bankers need to have a holistic view on these risks, and help clients mitigate them.

      Sector developments on sustainability

      Mitigating these risks is very sector specific. Improving the impact of a fashion boutique store is very different from “greening” steel making. On these matters, sector expertise is of the essence. Bankers should understand the latest sustainability related developments within a sector. Shipping bankers should know the latest ship legislations, which technology could aid the shipping company lower their emissions, and which options should be most beneficial in the client specific situation.

      Sustainable banking products

      Subsequently this knowledge should be combined with financing expertise. There are a lot of new questions bankers can ask, and again, these will need to be highly sector specific. Let’s start with the most important question: “Is a client helped with the financing of their transition?”

      Let’s take the example of a bakery:

      Would a bakery be better off with a new and efficient electrical oven, instead of a gas-powered one? Can we finance that favorably for the client, and will the client be left with sufficient free cashflow? Is the investment in an electrical oven worth it, considering the expected remaining time in business and the resale value of the oven? Are there additional subsidies the client can be helped with? Can the baker install solar panels to lower the oven’s energy costs? What is its energy contract currently, and can it be improved? Favorable financing, and “wiggle room” for bankers to tailor towards the sustainability need of a client often materialize via different products a banker can offer a client. Whether it is a Sustainability Linked Loan, a Green Loan or a Sustainable Mortgage, bankers need to know what they can offer. This also requires effort from a banker.  

      Ideally, a banker becomes an expert in sustainability and can help the client with both the financial case as well as the new sustainability challenges. Yet, this asks a lot of a banker. Not all bankers will be able to become fully comfortable with this new area. In practice, we see that banks sometimes set up a support team. This team supports bankers with specific sustainability related questions. The degree of involvement depends on the amount of help the bankers need regarding sustainability: the support team can join for every client visit, so the responsibilities are split, or only jump in when for example setting highly specialized targets for Sustainability Linked Loan.

      Bankers need to effectively gather essential the clients’ sustainability information in a non-invasive way

      Banks need to understand the sustainability impact of their portfolio. Part of this need comes from regulatory pressure. Regardless, most green banks have also made voluntary commitments to lower their impact on the climate.

      Understanding the sustainability impact of the portfolio requires a lot of new information. Information such as the client’s greenhouse gas emission, or the EU Taxonomy’s ‘greenness of activities’, has traditionally not been something a bank was interested in. After all, it did not convincingly impact the creditworthiness of clients. Likewise, lowering sustainability impact of a bank’s portfolio has not been a goal in the previous decades.

      This means new data challenges arise. As mentioned before, the targeted climate impact reduction goals can only be reached when banks can finance clients on more sustainable business practices, or to only finance (relatively) green assets. This requires detailed and frequently recurring sustainability information on client and asset level.

      Understandably this requires a lot of effort. Luckily there are more benefits apart from regulatory adherence. Having detailed information allows for more sustainable product innovation, picking the most transition-worthy clients, a lower exposure to stranded assets and many types of other benefits, ranging from more sustainable brand recognition to being more attractive for sustainability-conscious talent.

      Sustainability related data requirements and methodologies are not yet standardized. This is currently visible in relatively a lot of variation in client outreach. This frustrates clients and bankers alike, and hampers sound data gathering. Even though clients can have strong sustainability ambitions, it does not mean that clients accept an endless barrage of either vague or oddly specific ESG questions from a banker.

      This creates a squeeze, as a lot of client specific information is also necessary for ESG reporting and for example tracking the bank’s decarbonization pledge. However, these issues can be mitigated. Two key factors play a role in making the client outreach journey smoother; make sure it is client centric and efficient.

      Below two best practices:

      1. Client centricity entails that it is clear why the bank asks certain questions, and how the client benefits. Also, it is important to make sure the client understands the questions asked, as the clients are not ESG experts themselves. They are entrepreneurs or business leaders. Therefore, it is also the perfect opportunity to help the client with their transition. See below an example for an agriculture (horticulture) client: 

      Question: Do you currently have drainage systems?
      Adding the why and the benefit:
      “We would like to assess this, as we see more and more sudden and heavy rainfall in your area. If you make use of drainage systems, or other modern water management practices, it protects your company from floods, and thereby our loan to you. If you have this, we can offer you a discount on the interest rate of 5 basis points”
      This is also an opportunity to help the client further – which might also generate a cross-selling opportunities:
      “If you do not have a drainage system yet, we are able to grant you an additional, very favorable loan to get this installed. Subsequently, we can also offer you a lower premium insurance product than you currently have for crop loss.”

      1. Efficiency can be subdivided in finding a methodology that circumvents client outreach from bankers and making sure information that is requested is used and stored properly, so that bothersome recurring requests are limited.  
        • Using public or third-party data is a more and more common way to retrieve ESG data. Either client specific or location-based information can be derived from an external party. The amount of information offered is growing fast, both from data vendors as well as from more raw data sources, such as national statistics organizations. Alternatively, climate impact estimations are allowed to be made, based on generic client data, such as industry or country of incorporation of the client.
        • Storing and using information properly is key to unburden bankers. This prevents repetitive questions. Yet, as ESG data within the bank is rather new, it is not a given that this is immediately well-implemented. With Capgemini we have designed and implemented data management best practices regarding Sustainability Data. Some key components are as follows:
          • First, a solid process should determine what is considered sustainability data and what is not. This solves multiple discussions before they start. An example is the greenhouse gas emission of a collateral. Is it specific ESG data, or an additional data attribute relating to a collateral – and should remain with the collateral data owner?
          • Secondly, a separate role should be created for an ESG data owner within the Data Office. This person is responsible for the ESG data. This is the go-to person in the organization for ESG data management; whether it is missing data, a prioritization issue, or a decision on a new ESG data system, the ESG data owner should be the main character.
          • Next the ESG Data Use cases need to be clear from a business perspective. This way, it is clear what needs to be implemented. There is a big difference in data needs for reporting or for portfolio steering.
          • When the use case is clear, it needs to be operationalized. Operationalization consists of several activities, such as bringing the use case from words into output data attributes (data that ultimately is being used by the end user), finding the best methodology to get the used data attributes, and distilling such a methodology back to supporting data attributes (input data attributes). The methodology can also be influenced by whether data is already available via existing processes. A final step is converting these attributes into IT requirements, including description, format, frequency of use, etc., and finding the right IT environment to store this information[4].
          • If available, using the existing data architecture -such as a data marketplace – for central storage and reuse, will ascertain that data will not be requested twice, or that old data will be used.

      When data gathering is both client centric and efficient, the client relationship is better, and time is saved. This enables the banker to help clients take the next step in their sustainable transition.

      Conclusion

      The role of bankers is changing quickly. This requires a lot from bankers themselves, and they will need to acquire new skills. They ought to be helped. The banks’ strategy ought to give clear guidance on what a banker should be able to do for different types of clients.

      The bankers should also be helped by a strong data governance regarding ESG data, which ought to give good client data without overburdening the bankers with client outreach questions. This gives focus towards the company and the employees.

      Capgemini can both help in the customer and employee journey’s and is a frontrunner on managing ESG data. Furthermore, Capgemini has sector sustainability experts which can support bankers on the latest trends and their applicability to real customers.

      To find out more, do not hesitate to request a meeting with our expert, Diederick Levi.

      1. Creditworthiness is for example based on the banks’ internal credit risk rating. This rating is also important, because it requires a healthy cashflow or healthy collateral to make sustainability investments. The rating can be seen as a proxy for the two. 

      2. These green ambitions can be measured in different ways, and different organizations have different ways of measuring these Sustainability related ambitions. For example, a bank can inventory whether a client has a realistic transition plan as a measure for green ambitions. 
      3. When saying green banks, in this article ‘banks with an ambitious sustainability strategy’ is meant. 
      4. Often ESG data requires some new data systems, dependent on how the current data architecture is working.

      Our expert

      Diederick Levi

      Manager Sustainability
      Diederick Levi is part of Capgemini’s Invent Financial Services team. He focuses on accelerating the sustainability efforts of clients within the financial sector. Based in the Netherlands, Levi has worked with all major Dutch banks over the past years.

        3 key takeaways from NRF 2025

        Capgemini
        Jan 16, 2025

        A quick visit to NRF’s most recent Big Show made one thing clear: 2025 will be the year where science fiction becomes a shopping reality.

        From AI-enabled hyper-personalized experiences to the rise of responsive ads via retail media networks to next-gen supply chain automation, the retail industry is transforming on all fronts.

        But while retailers face unprecedented disruption across markets, digital enablers and consumers, it is important to remember that this onslaught of change also offers an unparalleled opportunity. Here we offer our take on three ways the retail landscape is changing, the retailers that are at the forefront of these trends, and the steps companies can take to turn fantasy into future success.

        A glimpse from NRF 2025

        Blended retail: Every space has commercial potential

        Long gone are the days of clear delineation between physical and digital channels. Now, retailers are operating in a blended reality, where every space, interaction, and data point has commercial potential.

        Take Gap, for example. In a session led by Bill Forbes, Sr. Director of Mobile Software Engineering, we learned that the retailer has more than 1.6 billion visits to its Gap app. Part of Forbes’s job is figuring out how to leverage AI to draw the insights out of those visits and determine the best touchpoints—digital, physical, or somewhere in between—for shoppers. The retailer is now experimenting with a fashion AI system designed to guide shoppers through tasks such as gifting, event styling, and brand discovery while addressing core challenges like accurate sizing, outfit recommendations, and relevant reviews.

        The takeaway for retailers is that in this current landscape, the product has become the consumer. Retailers are not selling physical goods so much as meeting consumer needs. With an incredible amount of data at their disposal, the business shouldn’t be around static products, but dynamic, personalized experiences that transcend channels and unite touchpoints.

        The new era of connected consumption and contribution

        The customer journey is no longer linear. Nor is it rooted in the idea of passive consumption. Instead, retailers are now operating in a dynamic and connected environment—one where the journey is determined by the customer’s needs, not the retailer’s capabilities.   

        As a result, companies will need to dramatically transform their systems and processes to enable this new paradigm. What used to be back-office functions must expand to include customer-facing applications.

        In a keynote session featuring Burberry CEO Josh Schulman, the retail exec outlined a new framework that the company designed to unite merchants, product development teams, and business leaders to help enhance customer engagement. This initiative focuses on reviewing product archetypes, identifying areas for improvement, and aligning investment, merchandizing and distribution strategies to drive growth.

        The key for retailers is to connect the business with their consumers as closely as they can. The mandate isn’t just about selling products—it’s about being an authentic part of consumers’ lives.

        Know what consumers want

        Every retail success story highlighted at NRF had one thing in common: A deep understanding and focus on the consumer. It’s what’s behind Bath & Body Works’ high NPS scores, Foot Locker’s high-impact loyalty program, and Tommy Hilfiger’s 40-year history as one of the world’s most celebrated brands.

        On one hand, brands and retailers have an incredible amount of data at their disposal to help them make better decisions. But what may be missing is a broader understanding of how consumer behaviors and preferences are changing.

        Filling this gap is the reason for our annual research study by the Capgemini Research Institute, What matters to today’s consumer. Unveiled at NRF 2025, this report highlighted some important findings that retailers can use as a lens when looking at their data.

        For example:

        • Over half (58%) of consumers have replaced traditional search engines with gen AI tools for product/service recommendations, an 86% increase from 2023
        • Two-thirds of shoppers say they would switch retailers due to a lack of sustainability
        • Over the past 12 months, online adverts influenced nearly one-third of online purchases

        Do any of those data points spark new ideas about what to look for in your own data? Do they serve as a starting point when considering investments in new technologies or capabilities, like AI or retail media networks? Do they give you pause about how to adapt or refine your goals, priorities and approach for 2025 to be more customer-focused?

        We believe our report to be a useful tool for retailers to better understand consumer sentiment and behavior. To download a copy, please visit our research page, What matters to today’s consumer: 2025.

        What’s next for retailers: 3 steps to guide 2025 and beyond

        While every retailer’s journey to the future will be different, we’ve identified three core principles to serve as the foundation of success, guiding businesses as they unlock growth, adapt operations and embrace purpose.

        Growth starts at the channel level. As companies consider their future strategies, they must identify where they can drive the greatest influence and impact. One promising opportunity highlighted by our research is the rise of retail media networks—leveraging existing digital and physical infrastructure elements to deliver personalized digital experiences to high-intent customers and forge new connections with brand partners. The value of retail media networks is significant: According to our analysis, Kroger delivered $1.3 billion in operating profit in 2023 from its alternative profit businesses, including Kroger Precision Marketing.

        Consumers are now willing to pay 9% of the order value for 2-hour and 10-minute delivery. 65% of consumers consider a 2-hour delivery format a key attribute when they shop, indicating that retailers should consider integrating this into their business models. Is your supply chain up to the challenge? For grocery and mass merch segments, where quick delivery and product availability are paramount, adapting operations to include localized inventory systems will be critical. These enhancements can drive efficiency and ensure customer satisfaction in a highly competitive landscape. The non-linear, dynamic, and multi-directional nature of today’s retail landscape requires a next-gen supply chain. Retailers need to create a holistic strategy that simultaneously takes cost out while also meeting the needs of the customer. 

        Sustainability and purpose-driven products may be last on our list, but it is certainly not an afterthought for modern shoppers. In fact, our research revealed that consumers want retailers to do more in this area, such as offering clear and compelling information about sustainable choices, providing easy-to-understand information about product sourcing, traceability and nutrition, and creating programs that tackle everyday issues like food waste. As retailers plan for the coming year, they can’t ignore the call to lead with purpose on issues that matter.

        Turning science fiction into shopping reality with Capgemini in 2025

        As retailers face waves of disruption on all fronts, leaders have a fundamental choice: stay the course or embrace the opportunity for change. In today’s dynamic landscape, those who seize the possibilities of transformation will not only navigate the challenges ahead but also redefine the future of the industry, driving innovation, resilience, and long-term success.

        Need help turning your NRF inspiration into action? Our team can help. Set up a consultation with our experts to learn more about how Capgemini can help your organization get the future you want. 

        Meet our experts

        Tim Bridges

        Global Head of Consumer Products & Retail
        Tim Bridges leads Capgemini’s Global Sectors and the Consumer Products, Retail, Distribution (CPRD) global sector practice, a portfolio that includes major global retail, fashion, restaurant, consumer products, transportation, and distribution brands such as McDonald’s, Coca-Cola, Meijer, Office Depot, Domino’s, and Unilever.

        Lindsey Mazza

        Global Retail Lead, Capgemini
        Lindsey is Capgemini’s Global Retail Lead. She is a retail thought leader and subject matter expert who specializes in shopper-centric, unified-channel commerce and innovation. With nearly 20 years’ experience in retail transformation, Lindsey has served some of the world’s largest retailers in analytics-enabled integrated planning and execution, from consumer demand to receipt.

        Owen McCabe

        Vice President, Digital Commerce – Global Consumer Goods & Retail, Capgemini
        Owen is the Global leader for Digital Commerce at Capgemini. He has led several major digital commercial transformations to enable our Consumer Goods clients to win through data and tech in the new retail landscape emerging through 2030. His previous experience includes 9 years as the global digital commerce practice leader at WPP/Kantar and more than a decade in senior brand marketing and sales roles at P&G and Nestle.

        Mayank Sharma

        Vice President
        Mayank is a Supply Chain Leader with expertise in driving supply chain transformations through use of digital solutions across planning, procurement, logistics, fulfilment, and sustainability. He has worked across Consulting, Operations and Technology giving him a well-rounded approach to identifying business transformation requirements and re-inventing supply chain operating models through performance-led technology transformations. At Capgemini, he is responsible for leading & growing Capgemini’s Supply Chain Practice for Consumer Goods, Retail and Distribution. Mayank brings unique experience of leading transformations as a consultant at Big 4 and at Amazon.com of leveraging digital solutions within e-commerce supply chain to drive end-to-end supply chain improvement.

        Kees Jacobs

        Consumer Products & Retail Global Insights & Data Lead, Capgemini
        Kees is Capgemini’s overall Global Consumer Products and Retail sector thought leader. He has more than 25 years’ experience in this industry, with a track record in a range of strategic digital and data-related B2C and B2B initiatives at leading retailers and manufacturers. Kees is also responsible for Capgemini’s strategic relationship with The Consumer Goods Forum and a co-author of many thought leadership reports, including Reducing Consumer Food Waste in the Digital Era.

        Vince Crimaldi

        Vice President
        Vince Crimaldi is a leader in Capgemini’s Consumer Products, Retail, and Services (CPR&S) market unit leadership team, responsible for strategy development and industry-specific solutions for many of Capgemini’s largest Consumer Products, Retail, Distribution, Restaurant, Grocery, and Pharmacy clients. With more than 25 years of experience in designing and delivering transformational technology-based solutions, Vince has accomplished this in a global context, forming teams spanning the U.S, Europe, Asia, Australia, LATAM, and the Middle East, while working in various global markets within Europe and Asia.

        Jennifer Conklin

        Vice President, Capgemini
        Jennifer has 20 years of experience in retail, helping direct-to-consumer brands and retailers use technology to deliver better experiences and outcomes for their customers. She returned to Capgemini in October 2022 after a brief stint as the Chief Customer Officer at a Chicago-based technology start-up, UPshow.  In her previous role at Capgemini, Jennifer led the commerce portfolio in Consumer Products, Retail, and Distribution, having joined through the company’s acquisition of LYONSCG.

        Sharmila Senthilraja

        Industry Platform Leader for Consumer Products and Retail, Capgemini India
        Sharmila Senthilraja spearheads innovation, global strategies, and market growth at Capgemini, leveraging 25+ years of experience across business and technology. She has held leadership roles at SAP, IBM, and Future Group, excelling in P&L management, digital practices, and analytics. With a rich background in grocery retail operations, Sharmila holds an MBA and an Executive Certification in Business Analytics from IIM Bangalore.

          Expert perspectives

          2025 energy and utilities trends: five key themes shaping the transition

          James Forrest
          Jan 27, 2025

          As we enter 2025, the global energy sector faces a volatile and fast-moving landscape. Pressures from rising electricity demands, geopolitical shifts, and digital advancements converge to redefine the way we produce, manage, and consume energy.

          Five critical themes are poised to impact us this year, offering both challenges and opportunities for governments, businesses, and consumers alike.

          The global surge in electricity demand continues, driven by the rapid electrification of transport, industrial transformation, and the exponential growth of digital infrastructure, including AI and data centers. These trends outline the challenge of meeting escalating consumption while advancing decarbonization goals.

          To address this, utilities and grid operators are embracing modernization and demand-response strategies. By leveraging technologies such as real-time monitoring and dynamic pricing, they aim to balance supply and demand efficiently. Additionally, investments in decentralized generation and storage technologies are gaining traction, empowering local communities with energy independence and resilience. These solutions highlight the growing dynamic between innovation, sovereignty and sustainability as we strive to meet the dual demands of growth and environmental stewardship.

          Nuclear energy will continue to see a global revival, with governments and industry leaders recognizing its potential to provide reliable, low-carbon power. Small modular reactors and advanced Generation IV reactors stand at the forefront of this resurgence, offering more flexible alternatives to traditional large-scale plants.

          However, the nuclear renaissance is not without its challenges. Regulatory hurdles, financial risks, delivery challenges and public scepticism remain significant barriers to progress. Innovative financing models, streamlined licensing processes, and advancements in safety technology are critical to overcoming these obstacles.

          Globally, nations are reassessing nuclear investments as part of broader energy sovereignty and decarbonization strategies. From Europe to Asia, the shift towards nuclear underscores its role in securing energy independence while meeting climate commitments. The coming year will be pivotal in determining whether the industry can overcome its hurdles and establish itself as a cornerstone of the energy transition.


          Generation IV nuclear reactors offer significant advancements over Generation III reactors. They are advanced systems designed to enhance thermal efficiency, fuel utilization, passive safety, and waste minimization while enabling closed fuel cycles and high-temperature process heat applications.

          Geopolitical and economic factors continue to influence the trajectory of the energy sector. In the wake of recent elections in the US and other major economies, energy policies are being recalibrated to align with national priorities. The emphasis on energy sovereignty has intensified, with countries prioritizing domestic energy security to shield themselves from geopolitical uncertainties.

          China’s dominance in low-cost energy solutions, including solar panels and battery technologies, is reshaping global trade dynamics. While this leadership has enabled rapid deployment of clean energy technologies, it has also fueled inflationary pressures and heightened competition. Balancing national interests with the need for global collaboration will be critical in accelerating the energy transition. Striking this balance will require robust international frameworks that encourage innovation and cooperation while respecting geopolitical realities.

          The energy transition hinges on the modernization of grids, which serve as the backbone of a sustainable energy system. Emerging technologies are transforming traditional grids into more resilient, flexible, and efficient networks capable of integrating diverse energy sources.
          Microgrids and distributed energy resources are playing an increasingly prominent role, enabling localized energy solutions that reduce dependency on centralized infrastructure.
           
          Meanwhile, advances in energy storage technologies, such as new battery chemistries, solid-state batteries and long-duration storage (100hours), are enhancing grid stability and supporting the deployment of renewables and electric vehicles.

          These innovations emphasize the critical importance of infrastructure investments in supporting the energy transition. Governments and private investors should collaborate further to accelerate the deployment of next-generation grid technologies, ensuring they are equipped to handle the complexities of a decarbonized energy landscape.

          The digital transformation of the energy sector is entering a new phase, with AI driving profound changes across the value chain. From optimizing grid operations, forecasting consumption, to predictive maintenance and enhanced customer service, AI is unlocking efficiencies and enabling smarter energy management.

          The market for AI in energy systems is projected to reach USD 14 billion by 2029, reflecting the technology’s growing importance. As AI makes it possible to analyze, correlate, and generate a lot of data, it can improve complex situations modelling. Beyond operational benefits, AI is playing a crucial role in integrating renewable energy into the grid, enabling real-time adjustments to fluctuations in supply and demand.

          AI and generative AIs potential extends beyond grid operations to accelerate in Research and Development for designing and building next-generation of batteries, bio-engineered fuels for example.

          Conclusion: navigating a complex transition and peaking emissions?

          The interconnected nature of these trends highlights the complexity of the global energy transition.

          Rising electricity demands, the nuclear revival, geopolitical pressures, grid modernization, and digital innovation all intersect to shape the sector’s future.


          To succeed, stakeholders should embrace collaboration within an innovation ecosystem, and adaptive policies. Governments, businesses, and consumers alike have a role to play in navigating these challenges and seizing the opportunities that 2025 presents. By aligning technological advancements with sustainability goals, the energy sector can accelerate its journey toward a more resilient and equitable future.


          2025 promises to be transformative, setting the stage for long-term progress in building a sustainable energy ecosystem. The path forward requires bold action and a shared commitment to fostering the innovations needed to power a cleaner, smarter, and more sustainable world.  The most powerful example of this could be that global emissions of greenhouse gases might peak.  The link between economic development and emissions is steadily weakening.  China has been making significant progress and if the demand for fossil fuels in China continues on its current trajectory it’s possible that global emissions could peak in 2025 and that would be a very significant development.

          Author

          James Forrest

          Group Industry Leader for Energy Transition and Utilities at Capgemini
          I lead in helping global clients with major business transformations involving smart grid, IoT, the reform of gas and electricity markets, major software and infrastructure changes, and the use of machine learning and artificial intelligence to drive significant business performance improvement.

            Unlocking hyper-personalization at scale: The power of a seamless content supply chain 

            Rob Pillar
            Mar 03, 2025

            In today’s eco-digital era, data has taken center stage. Organizations are increasingly focused on collecting, managing, analyzing, and utilizing data sustainably to deliver personalized experiences.

            Customer Data Platforms (CDPs) are essential in nearly every industry, enabling organizations to create detailed customer profiles, predict behavior and provide valuable insights for businesses aiming to enhance customer engagement and experience.

            While new capabilities introduce new possibilities – realizing them can expose unexpected limitations. In this case, turning these customer insights into compelling interactive experiences that resonate with individuals starts with producing and managing huge amounts of content.  

            The virtuous cycle of personalization  

            Personalization is no longer optional for digital marketers – it’s an essential component of any marketing strategy. With the rise of diverse digital channels and touchpoints, customers expect (often subconsciously) content tailored to their behaviors, interests, and unique needs.

            This is where CDPs deliver their value. With these supercharged databases organizations are able to craft hyper-targeted marketing campaigns that resonate with specific customer segments. And the more your customers interact with the content, the more data is generated for creating better targeted campaigns.

            This creates a virtuous cycle of data, strategy, content and consumption.

            Content-data paradigm 

            CDPs are adept at collecting and analyzing customer data. By transforming these insights into engaging content, businesses increase their marketing effectiveness.  However,  scaling the production of content to meet marketing demands amplifies this challenge. To deliver a truly exceptional customer experience, we need a content production and  delivery pipeline that’s fast, flexible, and able to keep up with ever-changing customer preferences. The key is to bridge the gap between data-driven insights and engaging content.

            While modern CDPs are especially effective capturing data to build segments and user profiles, the impact of these insights is only realized through equally compelling and timely customer content

            Essentially, delivering targeted campaigns means creating personalized content for diverse sets of audiences. This is where traditional content creation falls short, sparking the need for a faster, more adaptable content production pipeline to meet the with dynamic, real-time demands for high-quality, customized content.

            Translating the data insights into comprehensive and customized content which resonates with your target customers is the need of the hour.

            The content gap: building a robust content supply solution stack 

            With demand set to quintuple over the next two years, most organizations are finding it challenging to meet these escalating requirements. The fast-paced digital landscape continues to narrow the window of (user) relevance, compressing cycles and timelines for departments already struggling to keep up with demand volume Inevitably kicking off a downward spiral of futility which one can only escape with new strategy optimized with technology.

            As Adobe’s Chief Strategy Officer, Scott Belsky, reflects in a recent paper published by Capgemini Research Institute, “Marketing professionals need to start to experiment and think expansively about what Generative AI can do for them. The future of the digital world is going to be more personalized than ever before. Marketing has not been personalized down to the individual consumer yet, at least not at scale in any profound way. And that is the future.”

            As Scott astutely observed, complex problems call for innovative solutions. Adobe’s GenStudio is a solution that streamlines the entire content lifecycle, from initial planning and workflow management to final delivery and analytics. Powered by Firefly generative AI, it enables you to meet increasing demands, reduce costs, accelerate time to market, and drive significant ROI.

            Business impact of a strong content supply chain

            The true power lies in the integration of these tools. It provides organizations with the key to create, manage and distribute content while gathering insights with the much-needed velocity to attain hyper-personalization at scale. Coupled with our strategic expertise, this connected platform helps them deliver value to your customers effectively, and efficiently. 

            Installing a solid scalable content delivery system can help with: 

            1. Efficiency Gains- Reduction in content production timeline with automated routine content adaptation tasks can reduce the time and effort required for each step in the production cycle. Efficient and structured asset management will help establish standardized workflows. 
            2. Lesser bottlenecks and agile workflow- By implementing a streamlined content workflow that facilitates real-time collaboration, we can mitigate bottlenecks such as redundant editing and version control. Parallel collaboration tools streamline the approval process, accelerating content production and minimizing single points of failure inherent in traditional workflows.
            3. Improved scalability- Connected tool ecosystems allow for efficient and improved resource utilization.  Dynamic content scaling across media, channels, and formats makes personalizing content at a large scale possible in a short duration of time. The automated image and text creation tools of Firefly allow you to create content almost magically, in the blink of an eye. Scott Belsky (Adobe) uses ‘automagically’ to describe Firefly imaging models. 
            4. Consistency and quality- Using a unified ecosystem to go about the content production cycle facilitates us to maintain a uniform brand image. Consistent high-quality visuals along with customized personalized experiences for simultaneous customer segments attract customers and inspire loyalty.  
            5. Increased engagement and ROI- Increased responsiveness with personalized content and an easy go-to-market production cycle will significantly boost your credibility among your consumers. By understanding and catering to your customers’ needs, you can foster loyalty and encourage repeat business. With comprehensive and real-time data, measuring the performance of marketing strategies also becomes convenient and easy.  

            The path forward 

            To scale personalized content creation, a strategic approach is essential. This involves leveraging advanced tools and technologies to streamline the content production process, while also optimizing workflows and training teams to effectively utilize these tools.

            A seamless and efficient content supply chain is critical to drive personalized customer experiences. This involves leveraging advanced tools and technologies to streamline the content production process, while also optimizing workflows and training teams to effectively utilize these tools.

            At Capgemini, working together with Adobe, we reimagine customer experience by combining strategy, creative design, data and technology, so that our clients can transform their businesses to drive sustainable growth, operational excellence and the ability to adapt to change.

            Ready to unlock the power of personalized content? Join us at Adobe Summit to learn how our streamlined approach can help you transform your content supply chain and drive business growth.

            Author

            Rob Pillar

            Global Adobe Partner Executive
            Rob is a seasoned business and technology leader focused on digitally transforming enterprises to provide innovative digital experiences at scale. Recognized for building high-performing teams that create and deliver innovative solutions, Rob’s industry breadth combined with his digital vision and passion have produced transformative client outcomes featuring revenue growth in all sectors.

              The CTO Playbook for Innovation Strategy in Engineering – 4: Engineering doctrine

              Capgemini
              Capgemini
              Jan 10, 2025

              In the final blog of this series, I want to look at how the CTO can overcome the inertia that often exists between strategic direction and operational action. Establishing a thematic focus and setting clear priorities are irrelevant steps to take unless they can drive executable work that makes a tangible difference.  

              An engineering doctrine is essential for this shift.

              The Need for an Engineering Doctrine 

              As CTOs, we face a unique set of challenges: the rapid pace of technological change, the convergence of digital and physical worlds, and unpredictable external forces. These complexities require more than just strategic plans; they demand actionable principles that can guide day-to-day operations and long-term projects. This is where an engineering doctrine comes into play. 

              An engineering doctrine is vital for several reasons. Firstly, it provides a clear set of principles that guide the execution of strategic priorities. This ensures that all engineering activities align with the company’s broader objectives, fostering consistency and coherence across various projects. This alignment is essential for maintaining a competitive edge in a rapidly changing market. 

              Secondly, an engineering doctrine helps bridge the gap between high-level strategy and day-to-day operations. By translating strategic goals into specific actions, it enables teams to focus on what truly matters, driving efficiency and productivity. This operational clarity is particularly important in large organisations where the complexity of projects can often lead to fragmentation and inefficiency​. 

              Moreover, the doctrine promotes agility and adaptability. In an era where technological advancements occur at breakneck speed, having a flexible framework allows the organisation to pivot quickly in response to new challenges and opportunities. This agility is a critical component of modern engineering practices, ensuring that the company can stay ahead of the competition and continuously innovate​. 

              And it enhances communication and collaboration. An engineering doctrine establishes a common language and set of expectations across the organisation. This shared understanding fosters better collaboration among teams, reducing misunderstandings and aligning efforts towards common goals.  

              Our Engineering Doctrine 

              At Capgemini Engineering, our own engineering doctrine encapsulates the lessons learned from our extensive experience in running engineering innovation projects. This doctrine aims to be time-responsive and context-sensitive, ensuring it remains relevant in an ever-changing technological landscape. 

              Our engineering doctrine addresses several key areas: 

              1. Artificial intelligence is transformational – guiding the comprehensive adoption of AI across the organisation, focusing on transformational applications rather than isolated use cases. 
              1. Treat sustainability as a systems issue – prioritise according to reliable data; integrate sustainability into every aspect of engineering practices to ensure long-term viability and environmental responsibility. 
              1. Agility through model-based engineering – exploiting collaborative data models and mature tools to accelerate delivery and acceptance across disciplines, enhancing responsiveness and adaptability in project execution. 
              1. Prioritise the role of the human in engineering – incentivising creativity and problem solving whilst ensuring that human-centered design and social acceptability are at the forefront of product development and engineering processes. 
              1. Engage with key ecosystems – contribute to the standards and tools that enable network effects 

              Implementing the Engineering Doctrine 

              To effectively implement an engineering doctrine, CTOs must ensure that it is deeply integrated into existing organisational culture and processes. This involves: 

              • Communication and Training – clearly communicating the doctrine to all stakeholders and providing training to ensure everyone understands and can apply the principles in their daily work. 
              • Continuous Improvement – establishing mechanisms for continuous feedback and improvement, ensuring the doctrine evolves with technological advancements and organisational needs. 
              • Alignment with Strategic Goals – ensuring that the doctrine is aligned with the company’s strategic goals and themes, such as sustainability, digital transformation, and human-centered design. 
              • Metrics and Monitoring – setting up metrics and monitoring systems to track the effectiveness of the doctrine in driving desired outcomes and making adjustments as needed. 

              A strategic tool for tactical excellence 

              An engineering doctrine is indispensable for a CTO. It transforms strategic priorities into actionable plans, enhances operational efficiency, promotes agility, improves communication, and embeds a culture of continuous improvement. By leveraging such a framework, CTOs can navigate the complexities of the technological landscape and drive their organisations towards sustained success and innovation.At Capgemini Engineering, we continue to refine our engineering doctrine to meet the evolving challenges of the technological landscape, providing a clear path for our clients to achieve their strategic goals. As CTOs, embracing such a doctrine can help navigate the complexities of our roles and lead our organisations towards a successful and sustainable future.

              Authors

              Keith Williams

              Executive Vice President, Chief Technology Officer, Capgemini Engineering
              Keith Williams has 34 years’ experience in the engineering & technology industry. As Chief Technology Officer, Keith drives Research & Innovation, Strategic Investment and Technical Authority across all industrial and technical domains. He played a pivotal role in the development of the Capgemini WindSightIQTM innovative solution that brought real-time wind visualization to the Louis Vuitton 37th America’s Cup.

              David Jackson

              CTO Product and Systems Engineering, Capgemini Engineering

              Ramon Antelo

              CTO Manufacturing and Industrial Operations, Capgemini Engineering

                Research & Innovation at Capgemini Engineering

                Our research and innovation programs are business accelerators that help clients with high-intensity R&D to reveal the value of incremental

                The CTO Playbook for Innovation in Engineering – 3 : The core vs context model

                Capgemini
                Capgemini
                Jan 10, 2025

                As I outlined in my previous blog, at Capgemini Engineering we align our strategic priorities with key themes that guide all our engineering efforts and decisions. These themes – Organic Engineering, Resource Revolution, Hybrid AI, Digital Fabric, and Positive Futures – provide a framework for identifying and prioritizing activities. We then align our five themes with a Core-Context model to further refine our priorities.

                The Core-Context model

                The Core-Context model, introduced by Geoffrey Moore in 2006, is based on the rationale that the value of a company is tightly tied to the competitive advantage it has over its competitors, both in terms of Competitive Advantage Gap (CAG), which represents the difference with the competition, and Competitive Advantage Period (CAP), which defines the time this competitive advantage will be kept.
                This implies that companies have to focus their scarce resources on creating and maintaining this competitive advantage, and that puts the processes in two main categories:

                • Core: any process that contributes directly to the competitive advantage (CAG or CAP)
                • Context: all other processes required to fulfil commitments made to one or more stakeholders in the enterprise.

                The Core/Context model provides a valuable framework for CTOs to strategically prioritize and manage engineering and technological initiatives. By distinguishing between core activities that drive competitive advantage and context activities necessary for successful ongoing operations, CTOs can make informed decisions on resource allocation and innovation focus.

                Aligning the Core-Context Model with Themes

                A clear vision of an organizations core and context activities, and their criticality, remains a crucial support to effective decision making. The themes identified above, however, do present challenges and opportunities to re-think the implications of this model. For example,

                • Advancing technology has the potential to shift the boundary between automation and outsourced services in fulfilment of context activities
                • New technologies will require knowledge of, and capabilities in, new domains in core activities (for example in data-driven research).
                • Market commoditization may encourage movement of activities from critical to non-critical, even as opposing pressure arises from strategic concerns and the need for robustness in global supply chains.

                Gaining and maintaining clarity on the challenges and opportunities here is key. At Capgemini Engineering, we continue to leverage this approach, helping our clients achieve their strategic goals and drive sustainable growth through focused engineering innovation.

                Authors

                Keith Williams

                Executive Vice President, Chief Technology Officer, Capgemini Engineering
                Keith Williams has 34 years’ experience in the engineering & technology industry. As Chief Technology Officer, Keith drives Research & Innovation, Strategic Investment and Technical Authority across all industrial and technical domains. He played a pivotal role in the development of the Capgemini WindSightIQTM innovative solution that brought real-time wind visualization to the Louis Vuitton 37th America’s Cup.

                David Jackson

                CTO Product and Systems Engineering, Capgemini Engineering

                Ramon Antelo

                CTO Manufacturing and Industrial Operations, Capgemini Engineering

                  Research & Innovation at Capgemini Engineering

                  Our research and innovation programs are business accelerators that help clients with high-intensity R&D to reveal the value of incremental

                  The CTO Playbook for Innovation Strategy in Engineering – 2: The importance of thematic focus

                  Capgemini
                  Capgemini
                  Jan 10, 2025

                  As CTOs, the challenge of steering our companies through a rapidly evolving technological landscape requires a strategic approach grounded in clear thematic priorities. The thematic focus is crucial in ensuring that we remain agile, responsive, and forward-thinking amidst the complexities of today’s innovation-driven market. 

                  Thematic Focus: A Strategic Imperative 

                  In our previous discussion, we identified the three main factors influencing CTO decision-making: the pace of change, the convergence of digital and physical innovations, and unpredictable external forces. These factors underscore the importance of having a thematic focus to guide our engineering and technological efforts, and the way we prioritise. 

                  At Capgemini Engineering, we have developed five key themes that help anchor our strategic direction. These themes emerged organically, reflecting the bottom-up recognition of crucial areas that are influence our customers every day. They are interconnected, highlighting the multifaceted nature of modern engineering challenges. Below I have outlined the rationale behind each one:  

                  Five Themes Driving Engineering Innovation 

                  1. Organic Engineering: 

                  Organic engineering is inspired by the resilience and efficiency observed in natural systems. This theme focuses on designing products and systems that are both autonomous and efficient, much like nature itself. The aim is to create engineering solutions that can adapt and evolve, ensuring long-term sustainability and resilience in the face of disruptions such as those seen during the COVID-19 pandemic. This approach is evident in innovations like additive manufacturing, where nature-inspired lattice structures enhance product strength and flexibility. 

                  2. Resource Revolution: 

                  The resource revolution theme addresses the critical need to engineer materials at a molecular level to meet specific requirements that natural materials cannot fulfil. This theme is about creating materials with tailored properties, such as high thermal conductivity and low expansion rates, which are essential for advancing various technological fields. This revolutionary approach marks a significant departure from traditional engineering practices and is key to driving future innovations. 

                  3. Hybrid AI: 

                  Hybrid AI combines classical machine learning with advanced artificial intelligence, grounding AI applications in solid, defensible knowledge bases. This theme focuses on leveraging AI to enhance human capabilities rather than replace them, ensuring that both human intuition and machine efficiency are optimally utilised. The development of augmented engineering tools – where AI assists engineers in making more informed decisions; and autonomous systems in defence, where human machine teaming reduces the need to put people in harm’s way to achieve military outcomes, are both examples in practice. 

                  4. Digital Fabric: 

                  The digital fabric theme encompasses the foundational technologies that enable advanced computing and connectivity, such as 5G connectivity, edge computing, and advanced data architectures. These technologies are crucial for supporting the other themes by providing the necessary infrastructure for real-time data processing, communication, and system integration. This interconnected digital ecosystem allows for seamless integration and scalability of engineering solutions. 

                  5. Velocity of impact: 

                  This theme addresses the societal and ethical implications of technological advancements. It emphasises the need for responsible innovation that considers the broader impact on society and the environment. This theme is particularly apparent in the context of autonomous vehicles and AI, where the social acceptance and safety of these technologies are paramount. Engineers must ensure that their innovations contribute positively to society, fostering trust and acceptance. 

                  The power of themes for the CTO 

                  Having a solid thematic focus provides a strategic framework that helps CTOs balance innovation; practicality; and societal responsibility to overcome the dilemma of what to progress and what to hold off on. By aligning engineering efforts with themes that are uniquely relevant to their organisation’s strategy, CTOs can ensure that they anchor their decisions around what really matters in the areas that will enable them to achieve their corporate goals – be they commercial; environmental; or societal. Engineering, with its focus on practical application and real-world problem-solving, remains the cornerstone of this journey, guiding us through the ever-changing landscape of technology and innovation. 

                  Our related podcast episodes

                  Ever since the Industrial Revolution, there have been moments of seismic change; innovations that have triggered momentous and hugely impactful transformations in manufacturing. Join Capgemini Engineering’s Ramon Antelo and Leonardo’s Antonio Girardi to determine if we are on the cusp of another step change and, if so, how manufacturers can fully realise the value from advanced technologies and make the best of current and future research and innovation.

                  Dr, Dorothea Pohlmann and Siemens’ Pina Schlombs discuss how technology can help to ensure sustainability is the most important element in contemporary product design.  

                  Authors

                  Keith Williams

                  Executive Vice President, Chief Technology Officer, Capgemini Engineering
                  Keith Williams has 34 years’ experience in the engineering & technology industry. As Chief Technology Officer, Keith drives Research & Innovation, Strategic Investment and Technical Authority across all industrial and technical domains. He played a pivotal role in the development of the Capgemini WindSightIQTM innovative solution that brought real-time wind visualization to the Louis Vuitton 37th America’s Cup.

                  David Jackson

                  CTO Product and Systems Engineering, Capgemini Engineering

                  Ramon Antelo

                  CTO Manufacturing and Industrial Operations, Capgemini Engineering

                    Research & Innovation at Capgemini Engineering

                    Our research and innovation programs are business accelerators that help clients with high-intensity R&D to reveal the value of incremental

                    The CTO Playbook for Innovation Strategy in Engineering – 1: Introduction

                    Capgemini
                    Capgemini
                    Jan 10, 2025

                    Science and research may shape the future, but engineering transforms our world today.

                    Engineering drives global growth by advancing technology, boosting productivity, and improving efficiency across industries. Strong infrastructure reduces costs, enhances connectivity, and opens up markets, while engineering projects promote international collaboration. Engineering also addresses emerging threats, supporting sustainability, defence, and global biosecurity efforts. The IMF’s 2024 World Economic Outlook stresses that engineering innovations are key to sustaining global economic momentum. Chief Technology Officers (CTOs) must prioritise the development of effective engineering innovation strategies to foster growth, but this task is increasingly complex and critical. The challenge is shaped by three key factors. 

                    Three influencing factors

                    The first factor is the pace of change. The speed at which innovation occurs makes effective decision-making more difficult. Digital transformation, driven by advances in artificial intelligence, machine learning, and the Internet of Things (IoT), is accelerating rapidly. This evolution also extends to the physical world through innovations in materials science, nanotechnology, and biotechnology. CTOs must stay ahead of a constantly shifting technological landscape in both realms. The volume of information they receive today is overwhelming compared to previous generations, and they must discern what is substantive versus speculative, adding complexity to their decision-making. 

                    The second factor is the convergence of digital and physical innovation. This convergence reshapes industries, creating a multiplier effect where the combined impact of these innovations is greater than the sum of their parts. For instance, semiconductor advancements are opening up new possibilities in biology and medicine. CTOs face the dual challenge of staying ahead of rapid change and managing a vast array of potential advancements. 

                    The third factor is unpredictable external forces. CTOs must navigate an environment marked by rapid, unpredictable changes driven by societal demands, environmental concerns, and global economic shifts. With the convergence of digital and physical innovation, new opportunities and threats can arise quickly, requiring technology leaders to remain agile and responsive. 

                    The power of engineering for CTOs

                    The impact of these three factors makes it difficult for CTOs to plan long-term strategies. But they are held to account on their ability to do so, regardless.

                    This is why engineering is so pertinent, it  is an essential discipline to navigate the shifting sands  of technological change effectively. Its grounding in real world application, and its requirement to consider immediate consequences on people, processes and organisations makes it highly relevant to the pace of change. While fundamental science provides the theoretical foundation for technological advancements, it is engineering that converts these into practical applications because it is inherently focused on solving real-world problems and achieving desired changes in the physical world. It is this relentless focus on effective application that makes engineering indispensable for CTOs dealing with the convergence of digital and physical environments, and the use of technologies that work effectively in both.  

                    The CTO’s Dilemma

                    To accommodate the three influencing factors above, CTOs must strike a difficult balance. They need an engineering innovation strategy that fosters a culture of innovation within their organisations, where engineering teams are empowered to experiment, iterate, and develop cutting-edge solutions with freedom to explore. Yet they must simultaneously ensure that any engineering efforts driven by this strategy are aligned with the company’s overall business objectives and societal responsibilities, whilst also taking account of unpredictable external factors affecting the wider environment in which the company operates. Constantly navigating between these shifting sands is the essence of the CTO’s dilemma and they are understandably wary of making these tricky choices. Effective decisions are seldom reported but bad ones can become the stuff of corporate folklore. Nokia’s decision to pass on the Google Android operating system and Kodak’s dogmatic adherence to physical film over digital imaging are strategic failures driven by CTOs that defined their corporate stories. It’s a challenging time for this cadre of executive leaders. How can they tackle the task in front of them?   

                    In the coming blogs in we will cover the tools we use to set our innovation strategy for engineering. 

                    Authors

                    Keith Williams

                    Executive Vice President, Chief Technology Officer, Capgemini Engineering
                    Keith Williams has 34 years’ experience in the engineering & technology industry. As Chief Technology Officer, Keith drives Research & Innovation, Strategic Investment and Technical Authority across all industrial and technical domains. He played a pivotal role in the development of the Capgemini WindSightIQTM innovative solution that brought real-time wind visualization to the Louis Vuitton 37th America’s Cup.

                    David Jackson

                    CTO Product and Systems Engineering, Capgemini Engineering

                    Ramon Antelo

                    CTO Manufacturing and Industrial Operations, Capgemini Engineering

                      Research & Innovation at Capgemini Engineering

                      Our research and innovation programs are business accelerators that help clients with high-intensity R&D to reveal the value of incremental