The year 2000 may prove to be a watershed year for corporate information technology (IT) executives. If current trends continue, corporate IT will, for the first time, begin to emphasize data content over traditional hardware and software issues. This realignment of priorities will represent a significant change for most IT managers.
Information technology is a relatively new discipline; and, as a result, the roles of IT executives have been fluid and evolving. Initially, the proliferation of computers throughout all phases of a company's operations demanded expertise in hardware. And IT executives predictably concentrated their first efforts on creating stable, efficient systems.
IT is also much more affected by improvements in technology than other areas. Technological changes create opportunities for achieving a competitive advantage and improving operating efficiency. Since these technological developments occur regularly, they cannot be ignored. As a result, most IT executives have been primarily "process-oriented" and more focused on hardware, software and the physical transmission of data rather than the content of the data delivered.
While the pace of technological change has not abated, standardization of processes and software has calmed the waters a bit. IT executives are beginning to spend less time trying to determine which systems or products are best for their operations and, for the first time, realizing that processing internal data only may be hampering growth.
This is because internal data, while important, does little to enlighten a business about its customers' interests, buying habits or support preferences. Today, consumers have more options than ever before to satisfy their needs, and they are actively seeking vendors whose products and delivery best match their needs. Two immediate examples come to mind.
First, the U.S. Postal Service is a classic example of "business" erosion resulting from alternative suppliers. Every day, consumers are bypassing conventional postal methods and opting to use faster, more convenient options such as e-mail, faxes and express carriers.
And, second, consider the case of traditional department stores, once the bulwark of retail sales. Modern consumers work longer hours but have more disposable income, so they are forgoing time-consuming trips to the store. Instead, they are increasingly choosing to shop online via the Web, through mail-order catalogs delivered directly to their residences or via home-shopping television networks.
In light of these incredible competitive pressures, businesses are realizing that their products and services have to be what consumers truly want. And they must be delivered to the customer in as convenient a manner as possible or face preemption by another supplier.
For most IT executives, this "outward" focus on the consumer represents a significant shift from the more traditional "inward" focus on processing enterprise data. As management expert Peter Drucker has observed, "The inward focus of management has been aggravated rather than alleviated in the last decades by the rise of information technology .... It produces practically no information about anything that goes on outside of the enterprise."
Drucker added, "Management does not need more information about what is happening inside. It needs more information on what is happening outside .... Growth and survival both now depend on getting the organization in touch with the outside world."
If Drucker's views are accurate, it is ironic that the same area responsible for aggravating the inward views of management is also in the best position to help the enterprise focus on its customers corporate IT.
Because of its ability to deliver consumer information quickly, corporate IT has the power to help their companies maintain or increase market share even in the face of new competitive pressures. As William A. Crowell, CIO of Meredith Publishing (Better Homes & Gardens, Good Housekeeping and other titles) has said, "If you are the first to build a tight relationship with the customer, and know more about them than anybody else, you've created an enormous barrier for competitors."
Corporate IT executives can help their companies do this by shifting priorities away from hardware and software and focusing attention on collecting and using data that is far more customer oriented.
By organizing and improving the quality of data the enterprise uses, corporate IT managers are now realizing that data can play a major role in achieving many corporate objectives. Among other things, enhanced customer data can help management:
- Improve decision making,
- Increase operational efficiencies,
- Effectively manage customer relationships, and
- Multiply marketing productivity.
This outward-looking, customer-oriented process begins with the more efficient collection of customer data from existing company sources. Each day, most companies have multiple contacts with their customers, from outgoing sales calls and meetings to incoming customer inquiries. These contacts occur across divisional lines and represent important opportunities for the company to ascertain what its customers want, as well as their opinions on how well the company's products and services are meeting their needs.
Once relevant customer data is collected, corporate IT can then organize it and make it available for use by every division in the company. An interim step needs to take place prior to dissemination, however, to ensure that the company has the best information available about its customers. This is the enhancement of the company's data with additional, relevant external data about the consumer.
While a company's contacts with its customers may give it substantial knowledge about the relationship, adding specific customer information (demographic, lifestyle, attitudinal and geographic data) can take data a step further and provide real insight into precisely who their best customers really are and how to best service them.
Armed with this type of information, management is able to make more informed and better decisions, reducing the company's business risks substantially. Retail stores and sales offices can be located near concentrations of good customers and prospects. Product lines and inventories can be tailored to address their tastes. And the list goes on and on.
Corporate IT departments can attempt to create this enhanced data themselves. But a faster, more reliable and cost-effective solution is to partner with data companies that specialize in collecting, managing and delivering this type of information every day.
In addition, the delays that formerly occurred with this type of data enhancement are simply no longer a factor with the advent of delivery of data via the Internet.
The benefits of creating customer-oriented, outwardly focused data don't end there. Collecting, organizing, enhancing and disseminating customer data by corporate IT also enables the company to spot and remedy operational inefficiencies, such as the redundant collection and storage of customer data by different departments, while coordinating and improving customer contacts.
With regard to improving customer relationships, simply recall the last conversation you had with any customer service representative who had no idea who you were or the things you're interested in (which could broaden the relationship), much less the transaction you were talking about. By extending name and transaction data to these individuals, corporate IT can significantly improve service and greatly enhance customer loyalty.
Finally, creating enhanced customer data offers the opportunity to substantially increase the company's marketing productivity.
Analysis of customer data can produce a remarkably clear profile of a company's best customers and, concomitantly, best prospects. When these individuals and businesses are identified, marketing efforts can be directed to them in a much more tightly focused manner, producing better results and saving money simultaneously.
Furthermore, when the company uses its enhanced customer data to create products and services that mirror the wants and needs of this all-important customer group, the consumer perceives greater value from the offerings and the company providing them. As a result, the enterprise is able to both retain these satisfied customers longer and maximize sales and profits. Disenchanted former customers may also be lured back into the fold with new offerings that better meet their needs.
Corporate IT executives, then, have an exciting time ahead of them in the year 2000. The prevailing pace of business rewards managers who can think "outside of the box" and make the changes that will enable their companies to compete in the future.
IT managers who continue to dwell on hardware issues and processing internal data are denying the reality of the marketplace and the increasing number of purchase options available to consumers.
Those CIOs who can successfully create a corporate culture of customer information, one that values and uses enhanced customer data and makes it available throughout the organization, will be making a major contribution to their company's success in the years to come.
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