The primal motivation for any organization is survival. Our global markets today are significantly different than in the 1970s. For example, Chinas contribution to global gross domestic product is 17 percent, third only to the thirteen countries of the European Union and only slightly behind the leader, the U.S. powerhouse, whose share has slipped to 19 percent of global production. Some 20 years ago, Chinas share stood at just under 5 percent. As emerging countries continue to industrialize and become more sophisticated in designing, manufacturing and marketing products and services, as well as incorporating the role of information technology to distinguish themselves, competition is set to take on a new battleground altogether. Adding to this mix are two shifts taking place in the marketplace. First is the notion of the nanosecond investor whose behavior is largely a function of capitalistic greed in the here and now and second is the discriminating customer who is no longer afraid to change loyalties because information and transaction costs are now lower than ever before in history.
In the face of this new reality, the microeconomic pressures of revenue growth, optimal business mix, cost alignment where good costs are acceptable and bad costs (i.e., time and money spent on things that contribute little or no value) are not, new product/service introduction, extending the customer lead and talent retention, continue to take center stage. So how can an organization survive over the long run? Fundamentally, it boils down to one simple thing the only thing that really matters is your customers! In his seminal article titled Marketing Myopia which appeared in Harvard Business Review in 1960, Ted Levitt argues that the single most important question a business must answer is what business are you really in. Practically speaking, the question of what business you are in comes second once an organization has resolved that their customers are the reason for their existence and survival. Take the American icon Wal-Mart as an example. Wal-Mart takes its customers seriously, so much so that Wal-Mart strives to deliver the lowest prices to its customers everyday and always. Adidas, Apple Inc., BMW, IKEA, Research In Motion, Sony, Starbucks and Toyota are other notable examples of companies that are leaving their competitors with pie in their face as they set new and higher standards in delighting customers.
This article explores a strategic IT architectural blueprint that is the basis for realizing outcomes associated with a business strategy focused on master customer management (MCM). The key guiding principles which underline this blueprint are discussed. Figure 1 (see pdf) depicts an actual MCM blueprint for a transnational financial services company.
The ABCs of Master Customer Management
Customer needs, desires, behaviors and purchasing decisions are complex. They can rarely, if ever, be fully captured by neat mathematical equations, simulation models or statistical data points. In spite of this, at the end of the day, customers are still masters in the customer-company relationship. The four guiding principles of MCM, which build on the basic premise that customers are complex, are as follows.
- There are three distinct customer market demand curves consumer, commercial and dealer network. Each organization must contend with one or more customer market demand curves. Typically, product differentiation decisions and position in the value chain will determine the number of customer market demand curves for a particular organization.
- Each customer market demand curve is highly value oriented. The first component of this value orientation is the tangible benefits and results they achieve. The second is the experience customers encounter in doing business with you. The third is the relationship component do your customers feel valued, and do they trust you at the end of the day?
- Each customer market demand curve is not static. Each can change over time as new encounters are experienced.
- MCM is one of three key enterprise-wide processes. The other two are innovation management and risk management. Each of these three processes are interdependent, however. In the order of precedence, MCM comes first as it directly impacts customer market demand curves; innovation management and risk management indirectly affect customer market demand curves. Apple Inc.s iPhone was dubbed by TIME Magazine as best innovation of 2007. One of the reasons for Apples success is due to its prowess in delivering something of considerable value to its customers in a world of useless gadgets and copycat products. Simply excelling at supply chain logistics to the point where cost drivers are minimized is not an instant recipe for sustained market share success.
A Blueprint for MCM
Figure 1 depicts a MCM blueprint for an actual transnational financial services organization comprised of several business lines (with multiple products each), operating in multiple geographies and interacting with customers via online, offline and inline channels. The MCM blueprint consists of four constructs and five elements.
The four constructs in the MCM blueprint are line of business operational systems, downstream systems (i.e., document management, human resources, financial management, performance management and data mining/analytics), customer-oriented interaction points (e.g., inline, online and offline channels) and MCM environment. The lines of business operational systems are mapped to each independent business division and each downstream system represents a critical functional area of the organization. The arrows in Figure 1 represent a combined flow of data and control. The MCM environment is central to the strategic IT architectural blueprint and consists of five elements data acquisition and integration (DAI) layer, enterprise data warehouse layer, MCM platform layer, enterprise connectivity services layer, and MCM common component control layer.
Data Acquisition and Integration Layer
The DAI layer performs a number of functions including: (i) retrieving the data from the source systems and then transforming and loading them into either the enterprise data warehouse (EDW) layer or the MCM platform layer, and it treats the EDW and MCM layers as source systems - it retrieves the data from EDW and MCM layers and transforms/loads to the downstream systems. The DAI handles business logic, the process can be bidirectional and generally it processes large data volumes executed in batch mode, though it can support near real-time mode as well.
DAI has the capability to either load the data directly to the target system or generate the intermediate format files and use a specific vendors tool from downstream system to load the data. Although it is similar to traditional extract, transform and load processes, it has more functionality because it utilizes and communicates with the MCM common component control layer to standardize data, clean data, profile and validate data, re-grouping the data for EDW and MCM layers and reporting. These functions are all supported by metadata management, reference data management, systems management and data governance.
Enterprise Data Warehouse Layer
An enterprise data warehouse (EDW) is fundamentally different from legacy application operational systems in terms of the class of data it contains, the type of processing it supports, and the design criteria it uses. As a repository of integrated information, from autonomous, distributed and heterogeneous sources, a data warehouse supports analytical processing by enabling data pattern analysis of historical information across different aggregation levels.
The function of EDW is to consolidate and reconcile information from across disparate business units and provide a context for management, compliance and operational reporting and analysis. The Achilles heel of most EDWs in an operational and transactional setting is the lack of connection to up-to-date customer profile information.
MCM Platform Layer
Todays organizations are highly transactional, operational and analytically focused. Business never stops, customers are always demanding and your competitors are predators waiting to pounce on you to get your customers. The MCM platform layer stores the master customer data of the enterprise the uniform set of identifiers and attributes of the core customer entities. The customer data integration (CDI) hub is core and an important component in MCM because it creates and maintains an accurate, timely and complete view of the customer across multiple channels and business units. It is the central orchestrating mechanism (i.e., the engine that makes the vehicle).
Various customer touchpoints can trigger transactions or services which then communicate with the MCM referential platform either as runtime or near runtime style through the enterprise connectivity services layer. The business services and security and privacy services components of the MCM referential platform play a key role in guarding and controlling the master customer data.
Enterprise Connectivity Services Layer.
The enterprise connectivity services layer provides full-service capability for bidirectional communications among the four constructs of the MCM Blueprint. Generally it operates as runtime or near runtime, and is comprised of several technologies to support multiple channels (e.g., enterprise services bus (ESB), enterprise application integration (EAI), Web services). In a real-time or near real-time situation, it also utilizes and communicates with the MCM common component control layer for data standardization, data cleansing and validation. Figure 2 (see pdf) shows a high level comparison of the DAI and Enterprise Connectivity Services Layers.
MCM Common Component Control Layer.
If the MCM Platform is considered the circulatory system of the MCM blueprint, the MCM common component control layer is the nervous system. Two important components of this layer are metadata management, which is concerned with standardized data definitions, and reference data management, which is concerned with standardized data value translations and use. Complete end-to-end auditability of the data at all stages takes place in this layer as well, in addition to systems monitoring to support steady state operations personnel so that full and consistent customer experience is maintained at all times.
In 1874, Remington produced the first mechanical typewriter machine patented on the QWERTY keyboard layout. This machine not only revolutionized human communication but in large part changed the way society viewed labor and work. In many ways, over the past 50 plus years, this innovation also paved the way for a number of remarkable innovations in the IT industry. Some of the IT innovations include UNIVAC, programmable punch card calculator, RDBMS and SQL, Apple Macintosh, internet protocol suite and HTML. Information technology can really be reduced to the basic problem of moving 0s and 1s and making sense of what these combinations mean in a given context. Mastering this while at the same time maintaining a sound financial footing has eluded many organizations.
In the interconnected world of today, my customers do matter is the realization most first mover companies are arriving at. The true leaders of this pact are even redefining the envelope further by crafting and actioning a MCM strategy along with associated initiatives in the areas of customer lifecycle experience optimization, value-based customer engagement, active demand management and micro customer segmentation. What sets these companies apart is that they are not leaving to chance or coincidence that their customers end up as masters in the customer-company relationship. They are in fact seeking from the outset a business design in which the customer is truly a master in the customer-company relationship. To that end, the MCM blueprint specifically is the strategic IT architectural reference point for enabling, supporting and transforming these organizations so that they can implement a MCM strategy.
In the operational, transactional and highly analytical environment of today, the design principle of minimizing data coexistence is becoming paramount and functional placement across existing transactional systems is the de facto standard expected by senior management. Getting to MCM therefore involves a number of activities.
- Recognize that MCM is first and foremost a business strategy and should be supported by the head of client strategy (or equivalent role/position) in your organization.
- MCM involves change management and needs to be viewed as a journey because in reality there are no quick fixes.
- The MCM blueprint plays a critical role in I- enabled business change. The MCM Blueprint really becomes the strategic platform for change over time.
- Adopting the MCM blueprint should not be viewed as a one-time charge to the finish line. Existing IT investments have been made, therefore the new IT implementation and decommission plans (for antiquated systems) must support one another.
- Getting to MCM involves business investment in talent. There are new capabilities that are being developed along the way that need to be self-sustaining over the longer term.
Finally, with the MCM blueprint in hand, an organization can pursue either a best-of-breed vendor selection strategy or a single source vendor selection strategy.
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