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Understanding What Customers Value

Published
  • March 01 1999, 1:00am EST

For at least the last twenty years the information technology industry has been trying to address the issue of getting information to information consumers or knowledge workers. So, what is different today and why all the focus and attention on knowledge management and on new tools, technologies and products that impact the knowledge worker? I believe the change is driven by the realignment of businesses to focus on the customer. Customer orientation requires a thorough understanding of the customer and what he values as the basis for developing business and marketplace strategies. This, in turn, puts additional heavy emphasis on the need for knowledge management and business intelligence. In service organizations in particular, where the product being delivered to the customer is frequently in the form of value-added services, it is imperative to understand how to deliver the right product at the right time with the right value and at the right price to the customer. Although many customers understand their own requirements and needs, they do not necessarily know what that product or service is worth to them. For a service organization to properly price its products it is necessary to understand what customers value or would value and to draw on this knowledge to gain marketplace advantage over their competitors. Successful enterprises of the future will have economic models of their customer relationships and of their customers' value.

The enterprise of the future will build value models for a customer or a customer segment, drawing on data gathered from a variety of sources including ­ with their consensus ­ information from the customers themselves. These models will be data and knowledge-driven representations of the monetary worth of their services to their customers. They will understand the value of the benefits delivered to the customer and will develop a pricing plan that accounts for the benefits derived by the customer and not the cost incurred to develop and deliver the service or product.

These value models are not the only organizational changes that are driving the need for knowledge management and business intelligence. Customer orientation drives the need for process orientation. Customer orientation and customer relationship management require a seamless and integrated process that moves from the organization's customer, through its internal operations and processes, all the way to its suppliers and partners. How products are delivered to customers requires optimization of internal operations, which has been the main driver in the success of enterprise resource planning systems (ERPs).

The enterprises of the future need to have well-organized and optimized back-office applications to minimize the costs of operation. But back-office optimization is not enough. They also require front-office automation of their marketing, sales and services operations, areas which until recently have been neglected. But once the back-office operational systems and the front-office customer relationship management systems are in place, they need to focus on business performance and value delivered, not just cost optimization. To adequately price their products in the marketplace they need information to understand their business performance. Reporting and analytical techniques need to be deployed to help answer questions such as:

What are the best products and services we can offer?
What is the customer looking for?
What can we sell?
What is our competition doing?
What can we market?
Where are we strong?
Can we identify new customer segments?

But the knowledge that is needed to answer these questions and help understand the business processes is not only in the enterprise's structured data that is stored within the data warehouse and analyzed by OLAP and data mining tools. The unstructured information within an organization plays just as important a role in understanding the business processes as the structured information.

In fact, the documents, shared knowledge, processes, workflows, Web content, ERP data and legacy system information represent some of the most valued and valuable resources of the enterprise. This further highlights the crucial fact that the gap between business intelligence and knowledge management technologies is an artificial gap from the point of view of the knowledge workers and consumers of information.

Those of us in the information technology industry have had an "inside-out" view of the world. We have categorized tools and techniques based on the sources of data and the technologies we have used to manage that data. It is time to have an "outside-in" perspective on what knowledge workers really need.

This is why I believe that we will see a merging of the technologies that support business intelligence and knowledge management and infrastructures and processes that will help us use all the information assets of the enterprise.

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