Understanding and Influencing the Customer Journey

Last week in Downtown LA, eSage Group and Microsoft hosted an Executive Learning Lounge focused on understanding and influencing the customer journey.

ELLLinkedIn

The concept is a complex one. I came across this great article in the November issue of Harvard Business Review.  I hope you find it as insightful as I did.

If you are in Seattle, we are having a Customer Journey panel at the DAA Seattle Symposium on November 12th.  Shish Shirdhar will once again get in the panelist chair along with Michael Lisin of Disney and Duane Bedard of eSage Group will moderate!

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Competing on the Customer Journey – HBR, November 2015 – Executive Summary

As digital technology has enabled shoppers to easily research and buy products online, sellers have been scrambling after them, trying to understand and satisfy their wants. Savvy companies, however, are using new tools, processes, and organizational structures to proactively lead digital customers from consideration to purchase and beyond. They are creating compelling customer journeys and managing them like any other product—and gaining a source of competitive advantage.

Building successful journeys requires four key capabilities: automation, to smoothly carry customers through each step of their online path; personalization, to create a customized experience for each individual; contextual interaction, to engage customers and appropriately sequence the steps they take; and journey innovation, to add improvements that enhance and extend the journey and foster customer loyalty.

In addition, the most successful companies have a particular organizational structure, with a chief experience officer overseeing a journey-focused strategist and a “journey product manager.” This latter role is critical—the journey product manager leads a team of designers, developers, data analysts, marketers, and others to create and sustain superior journeys, and he or she is accountable for the journey’s ROI and general business performance.

Insights into Big Data and Marketing

Recently, I came across an article by Michael Brenner, VP of Marketing and Content Strategy for SAquestionP and Forbes contributing author. He highlights that to derive value from Big Data, make sure that you start with a set up well thought out questions. He also refers to some tips that eSage Group’s own Dean Bedard wrote in a prior Information Management article about the same subject.

Check out Michael’s article here: http://bit.ly/13Iapji

Wow, is this really true? CMO Tech Spending Good For IT?

Blog“Wow, is this really true??….

A recent article by Doug Henschen in InformationWeek (see full text below) mentions a prediction from Gartner that indicates CMO’s will outspend CIO’s on technology by 2017.  Even if this prediction is anywhere near true, it would be amazing and really shows the influence that digital marketing and associated analytics technologies are having on this space.  Marketers are now truly learning the immense benefits associated with properly tracking and extracting value out of multi-channel marketing data.  CMO’s can now use technology to analyze what channels are working best to attract specific customer segments and how one marketing channel leads to engagements on other related channels.  So today you can now track who is engaging on your social media channels and also navigating to your web properties to learn more about your products or make purchases.  What all this means of course is that marketers will need to form even tighter relationships with the IT teams at the organizations where they work, to bring all the pieces together.  There will need to be hardware to host all the digital marketing tools, likely deployment of big data platforms like Hadoop to store and process all the data, then the hosting and maintenance of the associated data integration and marketing analytics tools required to extract value out of all this multi-channel marketing data. Marketing will need to work closely with IT to get this infrastructure in place, but there will be challenges when blending the two worlds due to communication and prioritization issues.  Marketers will need help bridging this gap to make sure that their requirements are being understood, the right tools are deployed to meet their specific needs, and new incremental functionality is being rolled out in a rapid Agile fashion.  The role of the marketer is evolving rapidly with the associated expansion in responsibilities and the requirement for a new level of integration with other teams like IT.

The good news is that these are exciting times for marketers, now we just need to hope that these new investments are spent wisely on quickly extracting customer insights from this data in a matter of weeks, not months, or years….”

Article: Why CMO Tech Spending Is Good For IT

As CMOs increase their tech spending, it’s up to IT to get wise to marketing’s ways.

By Doug Henschen, Big Data
February 04, 2013
URL: http://www.informationweek.com/big-data/news/big-data-analytics/why-cmo-tech-spending-is-good-for-it/240147374

By now, most CIOs have heard the Gartner prediction that chief marketing officers will outspend CIOs on technology by 2017. Whether or not you agree with that prediction, there’s no question that marketers are now influential technology buyers, even if they’re not taking swaths of responsibilities away from CIOs.

The onslaught of interactive marketing and digital commerce — starting with the Web and email and more recently venturing into mobile and social interactions with customers — is behind much of this technology spending. It has also put marketers under pressure to reconsider how they measure, manage and execute marketing across traditional channels, whether print, TV, radio, in-store, Web or call center.

Technology is finally doing to marketing what it did to financial markets two decades ago: driving it toward automation and real-time analysis, says marketing strategist David Meerman Scott, author of The New Rules of Marketing & PR.

On the automation front, specialized workflow systems with supporting asset management and collaboration features are helping marketers develop and execute campaigns at scale and with the speed demanded by fast-moving consumer trends. Analytics is bringing more precise measurement and, hopefully, better planning and smarter decision-making, both within individual marketing channels and across channels, letting companies adjust their investment mix for maximum impact.

Too many marketing organizations have been underinvesting in technology, relying instead on manual tracking using spreadsheets and email. But those old ways are breaking down given the demand for scale and speed. The future of marketing is going to be “much less art and much more science,” says Meerman Scott.

The science relies on analytics, requiring plenty of data. This should be welcome news to IT pros, who are in the best position to help with the inevitable data management challenges. But CIOs “can’t just wait for CMOs to say, ‘Please help us,'” warns John Kennedy, VP of corporate marketing at IBM.

Only 10% of 550 marketing execs surveyed by the CMO Council put a priority on improving collaboration with their IT organizations this year, despite the fact that 43% of them plan to hire marketing or customer analytics talent, 41% plan to deploy email marketing automation and a third plan to deploy website performance optimization and mobile apps. If marketing and IT teams don’t work together, this marketing tech spending won’t reach its full potential. “CIOs have a role to play at all levels of marketing, particularly in aligning the technology so it can scale,” Kennedy says.

Understand Marketing’s Needs

One of the problems is that CIOs often don’t get how the CMO role has changed. “The marketer’s role has expanded from just driving demand and sales,” Kennedy says. “Now they’re also creating content, customer experiences and customer engagement” through Web, mobile and social channels.

IT leaders must map what marketing does these days to the emerging technology that backs various functions. The three main categories of marketing management systems, as defined in Gartner’s Magic Quadrant, are CRM-based multichannel campaign management (MCCM), integrated marketing management (IMM) and marketing resource management (MRM). Automation and analytics show up in all three categories.

MCCM systems are used for such processes as managing loyalty-card programs and promotional content. Their decision-support capabilities let companies quickly change inbound and outbound marketing offerings. IMM systems track a project from start to finish: from developing marketing concepts and allocating resources (money and people) to creating, testing and executing campaigns and evaluating results and feeding that analysis back into the next concept-development phase. MRM systems have supported strategy and planning. They’re now moving into operations by incorporating creative workflow management, asset management and fulfillment capabilities for the logos, videos and other materials used in marketing campaigns.

IBM was among the first big tech vendors to jump into marketing technology when it acquired Coremetrics (Web analytics) in 2010, followed in short order by acquisitions of Unica (MCCM and MRM), Sterling Commerce (e-commerce) and, in 2012, DemandTec (marketing analytics) and Tealeaf (customer experience analysis). Adobe acquired Web analytics vendor Omniture in 2009, expanding into MCCM. Teradata acquired Aprimo (MCCM, IMM and MRM) in 2010. SAS acquired Assetlink (MRM) in 2011.

Salesforce.com has focused on the social channel with its 2011 acquisition of Radian6 (social analytics) and Buddy Media (social marketing). Last year, Microsoft acquired MarketingPilot (IMM and MRM) and Infor acquired Orbis Global (MRM).

In the latest big marketing tech deal, Oracle announced in December plans to acquire Eloqua, which does MCCM. Competitors are downplaying Oracle’s $871 million deal as mostly focused on business-to-business marketing, but Oracle could easily extend and integrate Eloqua’s technology with its other assets to address consumer marketing, says Forrester analyst Rob Brosnan. Combined with other Oracle cloud apps such as Oracle Fusion CRM, Eloqua has the makings of a fresh replacement for Oracle’s aging Siebel CRM platform, Brosnan says.

IT teams must understand the five groups within marketing organizations and the key technology investments they’re making, Forrester contends. The list starts with CMOs at the top and then moves down to brand marketers, marketing operations, relationship marketers and interactive marketers (see below). Analytics is on the list at every level, and automation is needed at every level below the CMO.

What Marketing Technology Buyers Need
Group Key Needs Representative Technologies
CMO and other marketing leadership Focus on all aspects of marketing. Key areas include measurement,   strategy and marketing optimization. > Marketing performance management
> Marketing mix modeling
> Attribution
Brand Marketer Focus on building the brand and creating compelling brand content. Work   with agencies, media buying firms and creative shops. > Brand measurement
> Marketing resource management (planning)
> Asset management and localization
Marketing operations Central organization that focuses on budgets, processes, vendor   relationships and fulfillment. > Marketing finance management
> Marketing resource management (workflow)
> Production and fulfillment management
Relationship Marketers Emphasize customer insight development and direct communications. > Descriptive and predictive analytics
> Campaign management and marketing automation
> Interaction management and contact optimization
> Event-based marketing
Interactive marketers Focus on digital advertising, itneractive marketing and emerging media   strategy. > E-mail, search, display, social and mobile
> Web analytics and online testing
> Behavioral targeting and recommendations
> Audience management
Data: Forrester   Research

 

The Red Cross Needed Help

At the American Red Cross, much of the marketing in years past was done locally, at more than 700 chapters, with little central coordination and control. Four years ago, however, new management brought in a team from the for-profit world to build a strong headquarters-level marketing organization.

More Insights

“We wanted marketing that’s consolidated, powerful and breathtaking, but you don’t get that when your efforts are fragmented,” says Banafsheh Ghassemi, a telecom industry veteran hired as VP of marketing-eCRM and customer experience.

The Red Cross wanted consistency not only between national and chapter-based marketing, but also across channels (TV, radio, print, direct mail, Web, etc.). Consistent “omnichannel” messaging and measurement is one of the hottest priorities in marketing.

The Red Cross had a mix of manual methods, point technologies and contract relationships with agencies. It lacked a marketing management system to track campaigns and return on investment by channel; those initiatives were tracked in paper notebooks, whiteboards, spreadsheets and email messages. The charity had a Teradata data warehouse, but it lacked campaign management tools and internal know-how for marketing segmentation and targeting.

Over the last three years, the Red Cross has filled many of its marketing technology gaps. It chose Aprimo, now owned by Teradata, as its marketing management platform. The charity’s brand and creative team uses the system’s automated review and approval workflows to develop marketing programs. The field marketing team uses the system to collaborate with Red Cross chapters about those programs and related priorities, planning and resource allocation.

The Red Cross is now deploying Aprimo’s campaign management features. That deployment was delayed for 18 months because the Red Cross learned that it needed a better handle on its data before it could do customer segmentation, testing and targeting internally. The IT team discovered that not every Red Cross line of business (disaster relief, support for military families, health and safety training, blood supply and international services) was feeding data into its Teradata data warehouse, and those that were using it weren’t defining data consistently. The Red Cross ended up hiring a VP of data strategy, Disney veteran Chris Taylor, to fix the problems. Poor data quality has been the bane of business intelligence and analytics projects for decades, one reason marketing teams need to work more closely with their IT colleagues.

Another data challenge is sheer scale. “Three years ago, we didn’t have the system or even the techniques in place to keep some of the data that we now know to be significant for effective targeting and segmentation,” Bob Page, eBay’s VP of analytics platform and delivery, said during a recent CMO Council webinar. While eBay had data on its marketing — mostly email campaigns and keyword buys — and the resulting transactions, it wasn’t keeping behavioral data such as clickstreams and site search records.

“We knew what products customers bought when they checked out, but we didn’t know how often they came to the site, how long they stayed and what they looked at before they bought,” Page said. “This behavioral data helps you understand interests, impulses and motivations … but it also explodes the amount of data you have to collect.”

redcross Analytics In Demand

Most companies are reluctant to throw out marketing technologies they’ve already bought; they’d rather build on what they have than start over. This preference explains why IT vendors are acquiring or building out their marketing capabilities to create a suite of products. Swedish insurance company Folksam, for example, uses Infor’s Epiphany CRM system. Epiphany added integration to Orbis Global’s marketing resource management system last year, and then in December Infor acquired Orbis Global. Around the same time, Folksam chose to replace an aging on-premises deployment of Aprimo’s software.

Folksam started deploying Orbis’s software on premises in October, and it expects to have it in production by May. The deployment will address outbound telemarketing, inbound call center, direct mail and email marketing. Folksam handles Web campaigns using a separate system, and its social network activity is limited to monitoring customer comments.

“All of our monthly plans and budgets for campaigns are set up in Orbis, and the campaign leader sets up the customer offer and what kind of media we’re going to use — whether that’s email or direct mail,” says Staffan Magnehed, Folksam’s director of CRM. “We also have to determine what the offer is going to look like, the budget, and how many different activities we’ll have in a multichannel campaign.”

Once the campaigns are planned and prepared in Orbis, the next steps of customer segmentation, targeting and campaign execution are handled in Epiphany’s Customer Interaction Hub, which combines automation and analytics capabilities.

Banks and telecom companies in particular are getting sophisticated with their promotional offers to new customers, says Forrester’s Brosnan. Those efforts might involve targeting certain customers to receive cross-sell or up-sell offers, waiting a certain amount of time and then triggering follow-up offers depending on the customer’s response. Such marketing was a manual process in years past “and would have taken place at a direct marketing agency or marketing services provider like Acxiom or Experian,” Brosnan says.

Now that Red Cross is on its way to resolving its data quality problems, it plans to handle customer segmentation, testing and targeting using Aprimo’s campaign management tools. The Red Cross used to outsource that work to agencies. “If I can have a system in front of me that lets me play with my segmentation and do testing at my fingertips, that’s a huge time savings compared to sending emails, submitting a work order and then calling to find out when that work will come back,” Ghassemi says.

Holy Grail: Knowing What Works

As companies market across more channels, it only intensifies an age-old problem: Which ads or promotions worked to drive a sale? Marketers refer to it as “attribution.” You might know, for instance, that a customer clicked on an email offer and bought something, but did a prior direct-mail offer, a search keyword buy, a Web or print ad, or a social media interaction make that customer more receptive to the email pitch?

Attribution determines where CMOs spend their marketing dollars. In a conventional, direct-attribution approach, companies look at each channel separately, measuring response within that channel without considering other efforts. Now companies are coming up with ways to study customer-interaction histories across channels and give credit where it’s due. But this has mostly relied on crude rules applied manually or replicated within marketing management systems. For example, a system might assign a sale to the first or last marketing touch, or it might average the attribution across all marketing interactions with a given customer.

Advanced analytics hasn’t cracked this nut yet, but vendors are trying. IBM, for one, last month released an Attribution Modeler application that uses advanced algorithms to assess the impact of efforts in each channel.

Macys.com uses SAS software for attribution analysis. “You need to understand the causation and correlations between digital and offline activities so you know what’s triggering which behaviors and which activity drives the next,” says Kerem Tomak, VP of marketing analytics for the online retailer.

Did display advertising drive traffic to search and then to a website, or did the interaction start with search? Is a visit to a website a failure if a customer puts an item in a shopping cart and then abandons it, or did the customer decide to go pick up the item at one of our stores? Can individual campaigns lose money while still moving customers a step closer to a valuable sale?

Macys.com is using its attribution modeling techniques to allocate marketing budgets by channel and to determine which products are best promoted through which channels — “building a bridge,” as Tomak describes it, between marketing and merchandising decisions.

“If you track interactions, attribute correctly and test your models so you know you can trust your analysis, then you have a very powerful tool that will help you orchestrate everything you do,” Tomak says.

2nd

This Isn’t A Threat

The complexity involved in knowing how best to market to your would-be customers is only growing. Forty-four percent of store shoppers surveyed during the last holiday season said their first step was to go to a store, but 20% said they went to that retailer’s website first and 10% said they started with a general online research. That’s according to a study of more than 24,000 consumers across 100 websites, 29 retail stores and 25 mobile sites, conducted by customer experience analytics vendor ForeSee.

Among mobile buyers, 43% said their first choice would be to buy in store, but they ended up buying through a mobile app, likely because the item was out of stock or they looked at the item in store and found a less expensive option online.

In this kind of multichannel environment, marketing is a whole lot more than a brand message. It doesn’t matter if the CMO or CIO is signing the checks, companies must use technology to interact better with their customers. They need to better understand their customers so that they can respond more quickly to changing buying patterns and please customers in every interaction, be it online, on the phone or in person. As IBM’s Kennedy puts it: “How we operate can be a bigger factor than what we communicate.”

IT pros shouldn’t see these marketing trends as a threat. The Red Cross’s marketing tech initiative meant spending more on the IT side and hiring a director of data strategy. The lesson: Whether they’re supporting customers or personalizing an email marketing message, great technologists remain at the center of making sure the customer experience lives up to the marketing promise.

 

 

Article Review: Fast Data hits the Big Data fast lane

ImageThe fast data concepts outlined in this article certainly make sense for certain situations, but it seems like there are numerous situations where customers would just be content to get their hands on big data at a less than glacial pace.  The quantity, lack of structure and lack of user friendly analysis tools associated associated with big data makes it rather difficult and time consuming for marketers to get at the data they want to analyze in days and weeks, let alone real time.  This will become less of an issue over time as more tools are developed so users can get at big data in more of a self-serve fashion.  For instance, Microsoft is working with a Yahoo spinoff called Hortonworks to develop connectors that will allow user friendly Microsoft tools to connect directly to Hadoop data sources for reporting and analysis.  This should definitely shorten the time between data collection and the time the information is available for analysis….and this will certainly make marketers happy.

Fast Data hits the Big Data fast lane

By | April 16, 2012, 6:00am PDT

Summary: Fast Data, used in large enterprises for highly specialized needs, has become more affordable and available to the mainstream. Just when corporations absolutely need it.

  • By Tony Baer
Of the 3 “V’s” of Big Data – volume, variety, velocity (we’d add “Value” as the 4th V) – velocity has been the unsung ‘V.’ With the spotlight on Hadoop, the popular image of Big Data is large petabyte data stores of unstructured data (which are the first two V’s). While Big Data has been thought of as large stores of data at rest, it can also be about data in motion.“Fast Data” refers to processes that require lower latencies than would otherwise be possible with optimized disk-based storage. Fast Data is not a single technology, but a spectrum of approaches that process data that might or might not be stored. It could encompass event processing, in-memory databases, or hybrid data stores that optimize cache with disk.
Fast Data is nothing new, but because of the cost of memory, was traditionally restricted to a handful of extremely high-value use cases. For instance:
  • Wall Street firms routinely analyze live market feeds, and in many cases, run sophisticated complex event processing (CEP) programs on event streams (often in real time) to make operational decisions.
  • Telcos have handled such data in optimizing network operations while leading logistics firms have used CEP to optimize their transport networks.
  • In-memory databases, used as a faster alternative to disk, have similarly been around for well over a decade, having been employed for program stock trading, telecommunications equipment, airline schedulers, and large destination online retail (e.g., Amazon).
Hybrid in-memory and disk have also become commonplace, especially amongst data warehousing systems (e.g., Teradata, Kognitio), and more recently among the emergent class of advanced SQL analytic platforms (e.g., Greenplum, Teradata Aster, IBM Netezza, HP Vertica, ParAccel) that employ smart caching in conjunction with a number of other bells and whistles to juice SQL performance and scaling (e.g., flatter indexes, extensive use of various data compression schemes, columnar table structures, etc.). Many of these systems are in turn packaged as appliances that come with specially tuned, high-performance backplanes and direct attached disk.
Finally, caching is hardly unknown to the database world. Hot spots of data that are frequently accessed are often placed in cache, as are snapshots of database configurations that are often stored to support restore processes, and so on.
  • So what’s changed?

The usual factors: the same data explosion that created the urgency for Big Data is also generating demand for making the data instantly actionable. Bandwidth, commodity hardware and, of course, declining memory prices, are further forcing the issue: Fast Data is no longer limited to specialized, premium use cases for enterprises with infinite budgets.

Not surprisingly, pure in-memory databases are now going mainstream: Oracle and SAP are choosing in-memory as one of the next places where they are establishing competitive stakes: SAP HANA vs. Oracle Exalytics. Both Oracle and SAP for now are targeting analytic processing, including OLAP (by raising the size limits on OLAP cubes) and more complex, multi-stage analytic problems that traditionally would have required batch runs (such as multivariate pricing) or would not have been run at all (too complex, too much delay). More to the point, SAP is counting on HANA as a major pillar of its stretch goal to become the #2 database player by 2015, which means expanding HANA’s target to include next generation enterprise transactional applications with embedded analytics.
Potential use cases for Fast Data could encompass:

 

  • A homeland security agency monitoring the borders requiring the ability to parse, decipher, and act on complex occurrences in real time to prevent suspicious people from entering the country
  • Capital markets trading firms requiring real-time analytics and sophisticated event processing to conduct algorithmic or high-frequency trades
  • Entities managing smart infrastructure which must digest torrents of sensory data to make real-time decisions that optimize use of transportation or public utility infrastructure
  • B2B consumer products firms monitoring social networks may require real-time response to understand sudden swings in customer sentiment
For such organizations, Fast Data is no longer a luxury, but a necessity.
More specialized use cases are similarly emerging now that the core in-memory technology is becoming more affordable. YarcData, a startup from venerable HPC player Cray Computer, is targeting graph data, which represents data with many-to-many relationships. Graph computing is extremely process-intensive, and as such, has traditionally been run in batch when involving Internet-size sets of data. YarcData adopts a classic hybrid approach that pipelines computations in memory, but persisting data to disk. YarcData is the tip of the iceberg – we expect to see more specialized applications that utilize hybrid caching that combine speed with scale.
  • But don’t forget, memory’s not the new disk

 

The movement – or tiering – of data to faster or slower media is also nothing new. What is new is that data in memory may no longer be such a transient thing, and if memory is relied upon for in situ processing of data in motion or rapid processing of data at rest, memory cannot simply be treated as the new disk. Excluding specialized forms of memory such as ROM, by nature anything that’s solid state is volatile: there goes your power… and there goes your data. Not surprisingly, in-memory systems such as HANA still replicate to disk to reduce volatility. For conventional disk data stores that increasingly leverage memory, Storage Switzerland’s George Crump makes the case that caching practices must become smarter to avoid misses (where data gets mistakenly swapped out). There are also balance of system considerations: memory may be fast, but is its processing speed well matched with processor? Maybe solid state overcomes I/O issues associated with disk, but may still be vulnerable to coupling issues if processors get bottlenecked or MapReduce jobs are not optimized.

Declining memory process are putting Fast Data on the fast lane to mainstream. But as the technology is now becoming affordable, we’re still early in the learning curve for how to design for it.
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Are you making the most of your company’s ‘software layer’?

Interesting way to think about an organization. I definitely agree that the software layer is becoming more important every year and companies really need to think about how they are going to efficiently build and maintain this layer to serve both their customers and their internal users. The larger the organization becomes the more disjointed and dysfunctional the software layer becomes. There are simply too many competing interests. How are you addressing this issue? 

Need help?  Contact eSage Group.

As consumers increasingly interact digitally with companies, competitive advantage lies in understanding the range and complexity of those touch points.

From the McKinsey Quarterly- http://bit.ly/HwTAOn  April 2012 • Aaron Shapiro

The past 15 years have created a very different business environment, which has empowered consumers, commoditized many products and services, and dramatically compressed margins. Not surprisingly, these changes have forced businesses to operate differently. But exactly what kinds of companies have successfully transitioned to the digital age? How have they regained and retained competitive advantage at a time when location is no longer a barrier to transactions, brands alone aren’t a proxy for quality, and pricing is increasingly transparent?

Of course, the answers to these weighty questions vary by industry and company. But I want to advance an idea that can help just about all executives concentrate their thinking. Whether you know it or not, your company operates as two businesses: a core that sells products and services (as it always has) and what I call the software layer (exhibit). This permeable layer comprises the technologies through which customers interact with your company, and vice versa.

To compete successfully, you must run your core business and your software layer as rigorously as possible. That means building an effective experience for people who use digital media and technology to interact with your company, investing to make such interactions a reality, and adopting a product, marketing, and sales approach that integrates the core business and the software layer into one compelling offer. In the digital age, optimizing the performance of both core operations and the software layer is mandatory. You can’t choose one or the other.

Understanding the software layer

For most companies, the software layer includes a corporate Web site, mobile applications, and a presence on Facebook, LinkedIn, or other social networks. It also includes e-mails sent to consumers, contributions to online communities such as discussion boards, digital advertisements on third-party Web sites, or touch screen installations in public venues or stores. Less visible interaction points include the application-programming interfaces through which computer programs connect and communicate with each other, digital marketplaces, and the order-management systems that facilitate business-to-business transactions. Fundamentally, any way someone or something uses technology to interact with your company is part of your software layer.

The need for companies to have a software layer has been driven, not by the digital revolution itself, but by the changes in consumer behavior it has enabled.1 More and more people prefer to do business with companies online instead of in stores. They stream movies rather than find something on television, and pay bills online rather than mail a check. This exponential growth in the number of virtual consumers, upending decades of ingrained business behavior, will only increase as people born after the Internet’s advent become the primary consumers and business decision makers. A company’s digital touch points—the avenues through which it interacts with consumers, such as Web sites, mobile devices, and social media—are in the ascendant, and the software layer is critical to attracting and winning digital-first consumers.

Individual companies recognize this. The retail-banking operation of JPMorgan Chase, for example, ensures that as many aspects of the banking experience as possible can take place through mobile devices, from depositing checks to sending friends money. The software layer can also dramatically change the way industries operate.

Consider the advertising business. To buy a television ad, for example, I must get in touch with a sales representative, negotiate a rate, and go through many manual steps to ensure that the ad gets on air. To buy a search ad on Google, I interact only with its software layer and buy the ad through its Web site; the ad runs within minutes. Or I can write my own software that interacts with Google to place ads. Obviously, there are trade-offs for convenience. Google is a more frictionless, quick, and simple transaction, but the company’s prices are set in an automated way. Television has more fluid, subjective pricing, often the subject of fierce negotiation. Google’s product is standardized, with ads created by filling out an online form; television ads are unique on many levels and require massive human effort to create, with almost every product sale one of a kind. This example shows that operating a software layer isn’t just about running technology—it’s about a completely different way of managing your business.

Operating the software layer

The software layer is meant to streamline transactions so that people and organizations can interact with a company in a more automated and efficient way. This usability is the key determinant of the software layer’s success: the more frictionless and enjoyable an interaction, the more likely users will engage in it and in new ones, bolstering the broader organization. By contrast, confusing Web sites that, for instance, repeatedly crash frustrate users and drive them to competitors.

At Huge, we studied the operations of the Fortune 1000 companies2 and found dramatic differences in the efficacy of their software layers. Retailing, for example, was the most proficient of the industries we surveyed, but even within this group large variances were apparent. One major grocery brand, for instance, scored poorly in part because it hadn’t implemented many digital-media elements that would help it connect with and service users.

My sense is that the biggest challenge companies face when operating a software layer is precisely that it involves software. While technology companies are created from the ground up to build and operate great software, most others aren’t. And most companies can’t live with this ingrained disadvantage: as more consumers default to digital interactions, companies must become great technology organizations or at least build such organizations within their walls. In my experience, successful software layer operations require a mix of centralization, user focus, and integration.

Centralization

The most effective organizations consolidate the software layer’s management and operations in a central technology group, whose leaders understand what it takes to build successful digital businesses. Such a group must meet the user’s needs, maintain a focus on profitability and technical feasibility, and have the power to make broad-reaching decisions that can affect the entire company. Most important, it can’t be an “internal agency” whose client becomes whatever intramural group hires it, as that will increase the risk of creating a software layer that only adds friction between a company and the lion’s share of its users. To create a coherent digital experience for an entire company, it’s important to break organizational silos and to integrate features and content that would normally reside in very different parts of the organization. The way Facebook and other tech companies—such as Burbn (which developed the iPhone photo-sharing program Instagram), Tumblr, and Twitter—connect with their user bases demonstrates this approach, which creates a standard experience millions of people use.

User focus

A mix of qualitative and quantitative research, market insights, and intuition is central to identifying consumer needs and devising ways to satisfy them. Different companies approach this imperative differently. At one end of the continuum are Apple and the late Steve Jobs, who was famous for putting himself in the shoes of users and intuiting their experience. Google is at the opposite extreme: iterative testing and lots of data.3 Either method has distinct advantages and disadvantages. The Google strategy often produces a series of small, gradual improvements, while the Apple approach is riskier and takes bigger leaps in the user experience and product design. But no matter which style fits a company’s culture and assets, management must dedicate resources to investigating user needs and consider them when making any decision about the software layer.

Integration with the core business

The software layer, at its best, will evolve from a communications or operational tool into an actual digital product or service. Dish Network, for example, has made its analog television service much more desirable by adding streaming video to it through the acquisition of Blockbuster. Nutrisystem has turned a food delivery offering into a powerful online dietary service by providing weight loss tools. Converse, New Balance, and Nike all allow consumers to design their own sneakers through Web-based programs. Integration such as this doesn’t happen
magically: the same central technology group that’s responsible for thinking through a company-wide software layer can boost the odds of creating competitive new business models and offerings by focusing on the relationship between digital experiences and a company’s existing analog products and services.

It’s perhaps easiest to envision how consumer-facing companies, such as retailers and financial institutions, can use the software layer. Yet any and all businesses that intend to survive the digital revolution should build a centralized, user-focused, and integrated software layer—or risk being left behind.

About the Author

Aaron Shapiro is the CEO of digital-marketing agency Huge and the author of Users, Not Customers: Who Really Determines the Success of Your Business (Penguin, October 2011).

We Are All Marketers Now: The importance of data driven marketing

We Are All Marketers Now: Read a great article from McKinsey that notes the importance of data driven marketing. http://wp.me/p29dXf-r

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It’s Time To Kill Your IT Strategy

Intriguing Forester article.  The author suggests that technology is so central to business these days that there should not really be a separate IT strategy, but rather a business strategy with a technology component.  It’s hard to argue that technology is not a very core part of most businesses these days and there definitely needs to be closer alignment between the business and technology side of the house.  Does this strategy development approach make sense for your org?

Article below:

Posted by Nigel Fenwick on March 9, 2012

Yes, that’s right — I’m suggesting CIOs should stop working on IT strategy. The days of developing a technology strategy that aligns to business strategy need to be behind us. Today’s CIOs must focus on business strategy.

Let’s face it: Does sound business strategy even exist today without technology? Most CEOs would likely agree that, unless you are running a lemonade stand, any successful business strategy must have solid technology at its core. The challenge for today’s CEOs is that, while planning business strategy in isolation from technology is sub-optimal, it remains the most common way business leaders develop strategy. And while there have been many great books about strategy, the specific challenges facing the CIO are largely absent.

That’s why Forrester has researched the ways in which companies develop technology strategy and also why we have developed the Business Technology Strategic Planning (BTSP) Framework (to be published soon). Our new BTSP playbook distills Forrester’s current research into an easy-to-follow guide that has at its heart the understanding that there should be no IT strategy, just business strategy with a technology component, or BT strategy.

Now you might think we’re crazy — after all, many firms, including Forrester, earn substantial revenue from advising CIOs on IT strategy. But as I see it, IT strategic plans belong in a museum.

In place of an IT strategy, every firm bigger than a lemonade stand must have a living, dynamic business technology strategy. It will be this strategy that drives future results of the organization and also that defines the future technology road map.

Of course the technology department (whether you call it BT or IT or something else) also needs to have an operating plan — the CIO’s plan for how to execute the BT strategic plan. The operating plan must include the continuous assessment of the technology capabilities, people, and funds required to execute the BT strategy. This also forms part of the BTSP framework.

By collaborating across the business to develop BT strategy and not IT strategy, CIOs move beyond alignment and position the technology team at the heart of effective business strategy. Forrester’s BTSP framework is helping CIOs rethink strategic planning.

As I write this, I’m working on a mini workshop on BTSP for attendees at the upcoming CIO Forums in Las Vegas and Paris, where we’ll go deeper into how BTSP applies business capability maps to drive business strategy discussion. I hope to see you in Vegas in May or Paris in June!

Who knows, maybe soon even lemonade stand entrepreneurs could benefit from BT strategy.

http://blogs.forrester.com/nigel_fenwick/12-03-09-its_time_to_kill_your_it_strategy