The CMO Corner: How customer centricity impacts IT decisions
As part of the C-Suite Study by IBM’s Institute for Business Value (IBV), we asked CMOs in the electronics industry for their core challenge in the next 12 months and they were clear: 57% responded with increasing revenues, 38% chose demonstrating ROI, 32% chose reinventing their customer experience and 31% wanted a better omni-channel experience. Marketing is a numbers game with digital approaches leading the way to reshape the enterprise (see figure 1).
This digital reinvention has not only revolutionized how we communicate as brands or consumers, but also allowed companies to create exciting new opportunities to interact with consumers, their clients and their entire ecosystem of partners, suppliers and stakeholders, and permitting the enterprise to reframe the way to manage their business processes by harnessing the massive amounts of data and information available throughout an organization and beyond.
The CMO is as central to this change as the rest of the C-Suite. In front end processes the best-in-class CMO understands that his clients or consumers are looking for a differentiating experience in the engagement with his company. However, historically the consumer electronics industry is a technology and engineering driven environment, where communication and focus has been on new product innovations and technology, hence CMOs must rethink every aspect of their strategy, marketing and communication to enhance customers’ experiences with their organization.
CMOs in the industry understand that for a better customer experience you have to have an outside-in mindset, helping improve customer intimacy across the organization. To that end, 85% CMOs in the IBV’s study agreed their employees have a strong customer-first mindset and 77% were pursuing a visionary digital strategy. They understand the marriage of digital and traditional techniques in a unifying experience. They collaborate across the enterprise with colleagues on the product development, supply chain and logistics side to make sure their activities are timely and impactful. And they understand the deep need to know their customers better, which requires turning often disparate data sources into actionable insights. This scenario for improvement was selected by 75% of the responding CMOs, who are data savvy — using those new insights to create an omni-channel, consistent experience across all touchpoints that a consumer or client has with the company and brand, to drive revenue and ROI.
Digital reinvention in the high tech and electronics industry pushes organizations to rethink data-rich decisions — including marketing ones — down to the business process level, and subsequently that must now shape their IT strategy, architecture and applications.
Modern marketing now requires not only a better utilization and access to data insights and analytical skills but championing the technologies of the digital domain to support the organization in the actual engagement with clients. They must drive industry wide investment in CRM, marketing automation and digital channels like web, mobile, and social.
The objective for these investments in front-end solutions is creating interaction with clients and consumers, whilst masking the internal complexity of the enterprise in their touchpoints across the full customer journey.
Stability and reliability in core processes meets innovation and creativity for marketing
Yet, marketing has an additional challenge — and that is it must seamlessly integrate its desire for creativity and innovation in the customer experience with the desired stability and reliability of the back-end infrastructure. The business processes and IT architecture that drive the finance, product development, operations, logistics, warehousing, supply chain & manufacturing all bring data that impacts marketing.
Thus, the conundrum: high-tech and electronics companies need an IT architecture that provides both stability and long-term reliability for the core enterprise processes while such architecture must provide the flexibility to change and include new functionality as the business environment evolves.
In electronics, more is generally spent on the core enterprise processes of manufacturing and supply chain management. Electronics and high tech marketers must participate with their IT and Operations counterparts to create an end-to-end digital enterprise architecture that allows core transactions and analytics to run consistently and uninterrupted, covering main processes such as finance, supplier orchestration, demand planning, procurement, manufacturing and inventory management while also delivering that desired customer intimacy and the revenue that comes with it.
We’ve arrived at this misalignment for understandable reasons. Previously, most chief information officers (CIOs) were hired to digitize and bring order to companies’ internal systems and processes. They saw websites as marketing channels and were happy to let chief marketing officers (CMOs) oversee that province of technology. They had, and still have, plenty to do just to keep internal operations running smoothly. Marketers soon got into the habit of developing not just content, but also software programs to better reach and transact with customers. But now that websites and apps are becoming cornerstones of the business, the stakes are too high to allow this division to continue. The two sides of IT need to come together, driven by customer needs. — George Colony, founder, chairman, and CEO of Forrester writing in MIT Sloan Management Review
And obviously this often comes with a focus on efficient total cost of ownership, balancing ‘must haves’ with ‘nice to haves’. For that reason, marketing processes must connect efficiently and seamlessly with enterprise processes and business applications, receiving input and providing guidance (such as demand planning and promotion, retailer support and logistics).
The CMO must work with the CIO, the CISO, the CFO and the COO to determine the best path for that integration, to understand which processes are core (and not controlled by marketing) including which business processes and applications in which to integrate marketing into the core processes, or when to implement as supporting, non-integrated applications and processes. A great many considerations should be taken into account.
The frequency of the specific process execution, as well as the process complexity and its likelihood to change, might be a factor in such decision, e.g. an irregular, or fewer times executed process like ordering of end-of-life spare parts could require a different decision on pricing, logistics and retailer mix than an application for a continuous advanced planning and optimization of regular electronics products.
Obviously, the relevance of the business process and application compared to the core enterprise activity and company priorities might impact such decision, as well as the impact of the costs of such integration with the perceived or real benefits the enterprise can capture. In this context an 80–20 rule might apply, where the last 20% of integration of business processes might eventually drive 80% of the efforts of integration.
CMOs should consider where they will get more data and insight — and should strongly consider using internal systems to QA or control the external resources they’ve come to rely on. Why? One is GDPR compliance (regardless of whether you’re European or not, consumers will be demanding this standard of protection, sooner rather than later). Understand why GDPR is a powerful catalyst for change here. Another is the potential for giving away learning while building bots. To understand more on building intelligent enteprises, start here. Last, any enterprise, especially marketing, will need to continue to build talent and be a champion for digital experiences, so getting that understanding inside the walls quickly will be beneficial. Check out what CMOs are saying here.
Where to decouple architecture for optimal agility
Although the processes and exchange of data should be looked upon end-to-end, the considerations for marketing and IT to work together on application integration should include costs, time to benefit, integration effort and the necessary flexibility and agility of the IT infrastructure.
The required flexibility in the front-end activities is much higher due to the need to follow fast changing market conditions, new business models, introduction of new products and services and the one-to-many interactions in customer engagement and the sales process. Best practice throughout the high tech and electronics industry shows that most companies decouple their front- and back-end, e.g. creating an interface, enterprise bus or ‘middleware’ between their front-end and back-end applications.
This sort decoupling allows “app-ification” and realizes an agile, flexible infrastructure that removes the interdependencies between the various systems and application. It enables specific future choices, changes or iterations in front-end, not to impact the lower velocity architecture including the back-end where stability and reliability of the core processes are key requirements.
The key benefits for the enterprise of creating such more flexible and agile architecture, as opposed to building a single monolithic fully integrated system, is the ability to shorten the time-to-benefit for changes in, or new functionality, and eventually a less complex IT infrastructure where changes inherently would be less costly and faster.
This allows the management to react more quickly on new business ideas, without risking the drag of a monolithic IT architecture and additional load on the incumbent or external IT organization.
At a certain level this shows a similar best practice that nowadays can be observed in e.g. product development, where companies are moving from the traditional cascaded waterfall development approach in favor of smaller, quicker development iterations that support agile innovation and improve time to market by allowing for a fail fast, fail cheap business approach.
The intelligent business operation
It should be highlighted that such decoupling of front-end, back-end and potential non-integrated applications does not mean that there is no interaction between such systems, or that business processes cannot cover activities in the front- and back end of the enterprise. Even stronger, digital transformation actually pushes companies to respond rapidly to global demand changes whilst balancing service- and delivery costs throughout the organization.
So, thought leaders in the industry are looking at smarter customer insights and development in the front end and intelligent supply chains and manufacturing in the core enterprise processes. By managing and utilizing the large quantities of data across the enterprise, IT systems, and databases, where possible enhanced with external data sources, the company can obtain actionable insights from such data, and for example create golden client records, next best action, or analyze and control supply chain or manufacturing operations in real time to create a more responsive and agile service and delivery operation and realize a single version of the truth across the enterprise.
Potentially connecting transactions, client information and enterprise data through powerful cognitive analysis and combined with the trend to bring (part of) the IT infrastructure and applications to cloud, allows companies to work even more smarter, faster, simpler and cost effective.
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Additional content you might find valuable
The Modern Marketing Mandate from IBM’s Institute for Business Value
More Than Meets the I — the CIO Mandate from IBM’s Institute for Business Value
The Formidable Challenge Facing Next Gen CIOs on Medium
Connect with the author: Edwin Van Vianen
