Spotting Business Value in IT

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"We’ve done CRM; we’re concentrating on CEM!" – reverberates worldwide. In many companies CRM = Technology; CEM = Customer Focussed Business. Leaving aside the terminology debate, 'the business' seems belatedly to be taking a lead on the customer front. But, they should have been there from the start, plotting and planning technology adoption with IT to enhance the customer proposition. To think IT is now ‘done’ is a gross mistake: IT is an Aladdin’s cave of potential business opportunity that needs communal management.
(CRM- Customer Relationship Management, CEM – Customer Experience Management)

Two Techniques

Improving service and experience; engaging and collaborating with stakeholders; listening and learning; customer insight; the list of customer business initiatives goes on and it all needs technology support. Not from restrictive 'out of the box' applications, but from full-blooded infrastructure support which combines user applications, middleware, databases, networks and delivery method – on-site or on demand.

How is this to be managed? IT doesn't have the customer knowledge or remit to determine sources of competitive advantage; marketing doesn’t have the IT knowledge. Marketing thinks IT fails to deliver business value, IT thinks marketing is an unaccountable irrelevance. In only one third of companies do the two departments say they have fruitful relationships.

Companies serious about bridging the IT/marketing divide are dedicating IT staff to the marketing department to tackle heavy duty IT work such as data transformation and analysis; and it is having a positive effect. But strategic collaboration is also needed to tackle business innovation through IT investment. "Entrepreneurs are creating business value by spotting technology-fuelled opportunities in the markets and going out and sourcing the technology. Thus, IT value creation has become a 'business pull', not an 'IT push'" says Gartner VP, Andy Kyte.

Two techniques that combine the forces of 'pull' and 'push' are the Gartner 'hype cycle' and 'technology radar map'. Together they are powerful collaborative tools to assess the risks and benefits of technology investment. Both should be on every marketing and MBA syllabus – alongside such stalwarts as the Boston Matrix, SWOT analysis, and customer lifecycle mapping.

Hype Cycle

The hype cycle is a 'picturesque' tool for plotting the emergence and adoption of technology that may provide business opportunity. It charts the inevitable learning path from over enthusiasm, to disillusionment, to a full understanding of relevance.

The vertical axis gives the visibility of the technology (see appendix for definitions) in the market; the horizontal axis its degree of maturity in use, which can range from a few or many years. Typically, the technology follows a series of stages:-

Stage 1 – Technology Trigger – New technology is taken up by enthusiasts; at this stage it is untested and experimental. But people love the 'new' and the technology gets talked about and reported – it starts to be 'hyped up' as the next best thing to sliced bread.

Stage 2 – Peak of Inflated Expectation – At this stage, the technology is 'hot' with many people talking about its benefits – few are using or understand it but a lot are looking.

Stage 3 – Trough of Disillusionment - The early majority have started to implement the technology but it doesn't live up to expected benefits. Problems occur, frequently due to lack of attention to supporting changes e.g. in data, culture and processes. The technology gets negative 'hype' and slips down into the trough, where it may fade from the market or move to stage 4.

Stage 4 - Slope of Enlightenment – The problems are slowly solved through pilots, by an increasingly diverse range of organisations. This leads to a true understanding of business value.

Stage 5 – Plateau of Productivity – The technology becomes accepted as part of productive life in an organisation.

The hype cycle is a useful reminder of where different technologies are, at any point in time, in terms of maturity and adoption. It is a reminder not to see technology as a 'silver bullet' because of hype and not to ignore its opportunities when the going gets tough.

Technology Radar Mapping

The technology radar map is a planning and prioritisation tool for customer value propositions and competitive advantage, over a 10 year time period. It looks at the impact of a technology on a market and the opportunity it is likely to give a particular business. It should be tailored for each business.

With the radar map, the vertical axis is the potential business impact/benefit of the technology - will it improve the way current business is done; create the means to offer customers new propositions; or change the market? The horizontal axis is the time taken for the technology to reach maturity in adoption in a market.

When plotting technology on the radar map your customers’ needs should be firmly in mind. Other considerations are businesses and IT competence, along with contextual information such as a PEST and competitors’ market positions. Plotting out relevant technologies MUST be a join IT/Marketing responsibility; assumptions for each position must always be given, on both sides.

Priority investments will be to the left of the radar map: the further right, the more the focus should be on innovative use and experimentation.

The radar map is an ideal tool for:-

• Prioritising investigative risk/benefit cases
  
• Summarising technology/innovation investment analysis for education purposes

When combined with the hype cycle it is an excellent tool for overcoming 'pet projects'; the 'who has the greatest clout' syndrome; and the smoozing of senior management on the golf course by IT companies.

(NB – Data on both the above illustrations is taken from Gartner’s 2005 CRM and Emerging technology charts)

Different Mindsets

IT and marketing have different mindsets. IT is naturally more risk adverse, tasked traditionally with reducing costs: marketing is geared to finding growth through opportunities. According to a recent McKinsey survey, 81% of business leaders worldwide say IT innovation is very important to business growth; but not unsurprisingly, IT and marketing differ over the how. IT look at improving current services; marketing want new solutions: IT see productivity as automating business processes, marketing look to economies of scale such as outsourcing.

The power of the hype cycle and radar map techniques is that they act as a catalyst to bring these mindsets together, they give customer knowledge to IT and technology understanding to marketing and so enable the spotting and greater creation of business value.

Please add your own thoughts and opinions by clicking on the 'Add your own comment' link below.

Jennifer Kirkby
Strategy & Business Analyst, CMC
jennifer.kirkby@mycustomer.com

Find out more about Jennifer Kirkby

Appendix and Further Reading

The Technologies

The technology examples on the charts go beyond packaged marketing applications. They demonstrate the breadth of technology, marketing and IT should be examining together in order to deliver business value to customers.

• DNA Logic - High performance computing that will permit one to one personalisation and interaction.

• Collaborative Services - Technology that allows networks of customers, employees, partners to work together. Useful for open source design of products
  See Forget leaders, we need inspiration - by Jennifer Kirkby

• Biometric Identity Documents - The use of biological features (e.g. fingerprints, iris, voice pattern) for identification, as demonstrated in the film Minority Report.
  See Big Brother may be watching you - by Stuart Lauchlan

• Business Process Platforms - Enables the design of flexible, adaptable business processes to suit different customer needs and segments – the antithesis of 'out of the box' applications.

• Text Mining – Allows for the analysis of freeform written communication - useful for research eg complaints, written narrative.

• MRM (Marketing Resource Management) – Enables the planning, budgeting, co-ordination and evaluation of marketing initiatives, projects and resources. See Marketing Performance Dashboard - by N.C.Watkis, Contract Marketing Service

• Podcasting – Audio content that can be delivered via RSS to niche customer segments for use 'on demand'. Important communication tool for knowledge transfer eg product usage. See Future Developments in Podcasting - by Phil Leigh, Senior Analyst, Inside Digital Media, Inc.

• Corporate Blogging – See Welcome to the blogosphere - by Jennifer Kirkby

• Event Trigger Marketing – The identification of customer events, eg move of house, that trigger an appropriate customer communication. See The Evolution of Event Based Marketing - by Synapse Technology

• RSS (Really Simple Syndication) – A data format that allows companies to inform customers of new electronic content. Useful to alert people to relevant updates of information.

• SOA (Service Orientated Architecture) – Uses web-services to integrate cross-functional business processes. Used to create consistent customer experiences, and supply chain integration, amongst other benefits. See SOA – Seeking Other Answers - by Stuart Lauchlan
  and
  Delivering More for Less - by Alastair Trower, FrontRange Solutions
  and
  Improving Agility in Contact Centres - by Yankee Group

• E-Mail Marketing – Targeted, personal, speedy customer communication. Too many people are using it for mass- marketing, rather than a personal channel of choice. See Email Marketing moves beyond spam - by Stuart Lauchlan

• Web Self-Service – Allows customer to complete transactions or interactions themselves. See Customers As Quasi-Employees - by Scott MacStravic, Ph.D.

• Handwriting Recognition - Turns handwriting into useable computer text. Useful for data storage without a keypad eg form filling, post identification, PDAs.

• VoIP –(voice over internet protocol) – allows for low cost communication (eg skype) especially useful in conjunction with other inernet services eg self-service.

• Campaign Management – The automated running of customer communication campaigns. See Vital Marketing - by Jupiter Research

• Speech Recognition – Used for automated speech navigation, data entry and self-service. Still to find customer acceptance, so business value is debateable. See Speech technology finds a voice in business at last - by FT.com
  and
  2006 Predictions Roll In - by Stuart Lauchlan