According to a Forrester report, customers are driving their interactions with brands and “businesses must create positive and relevant customer experiences across channels and touchpoints.”
Companies that can’t do this—that can’t rapidly collect and analyze huge amounts of data and then use this analysis to improve the customer experience—will be left behind. This is a key reason approximately 50% of the S&P 500 will be replaced over the next 10 years.
By contrast, the future is bright for digital leaders. McKinsey states that companies making extensive use of customer analytics see a 126 percent profit improvement over competitors. And IDC predicts that by 2020, the amount of data worth analyzing will double and data-driven organizations will achieve an extra $65 billion productivity boost—a huge competitive advantage.
Unfortunately, most companies today are still digital laggards. According to a survey by Dell, 78 percent of businesses feel threatened by digital start-ups, only 5 percent consider themselves “digital leaders,” and 45 percent fear becoming obsolete in three-to-five years. And while IDC Canada puts Canada’s big data market at $1.5 billion annually just for software, a survey of Canadian companies revealed that only about 10 percent of nearly 300 respondents had some version of a formal strategy to capitalize on big data opportunities.
The time for companies to act is now. But with all the big data promises out there, how can you ensure your company will be a digital leader? By stepping out of your comfort zone, thinking holistically, and finding the right technology.
Keep it safe, but don’t play it safe
Making big data work in your company and finding new ways to engage customers requires a digital transformation that isn’t easy. It often requires implementing technologies and workflows that cut across traditional departmental and infrastructure boundaries—enhancing every aspect of the organization and even reshaping and redefining the business model from the ground up. So while purchase and implementation decisions, like always, should be based on thorough research and build on the success of others, executives cannot afford to be tied to past ways of doing business.
For example, chief information officers must reject the idea that IT is a cost center and instead begin thinking of it as a way to generate revenue and grow the business. This requires a deep understanding of how all the new IT strategies—big data, analytics, machine learning, cloud, IoT, social media etc.—can be woven together to enable more insight, new products and services, and greater efficiency. Many organizations have even brought in chief data officers to focus exclusively on this area.
Similarly, chief marketing officers should dive into the nuance of analytics and machine learning to devise strategies for uncovering trends and predicting customer behavior in real and near real time. Chief technology officers need to focus on delivering user-centric digital and mobile technology strategies that support greater collaboration and drive innovation. Finally, chief financial officers should always support the other executives with cost/benefit analyses.
At the same time, every executive must recognize that big data initiatives are not ends in themselves and cannot be given free reign. Gartner predicts that by 2018, half of business ethics violations will result from improper use of big data analytics.
This is why every big data stakeholder – IT, product development, sales and marketing, customer support, supply chain, legal, security and compliance, finance and lines of business – must be involved in developing the “big picture,” helping to devise strategies, overcome implementation challenges, and ensure internal and regulatory compliance.
The potential in every area of every organization is certainly unlimited. Can your organization:
- Enable customers to transact business and coordinate activity, including purchasing and tech support, across all platforms: website, mobile, in-store?
- Collect and share huge amounts of data about customer activity and preferences on an individual and macro level to drive engagement, increase sales, and increase loyalty?
- Find ways to begin shifting a product sales model to a service model?
- Begin rebuilding business workflows around digital platforms, such as replacing legacy office software (e.g. installed applications) and communications hardware (e.g. phone systems) with cloud-based solutions accessible from any device?
And so much more.
Consider the way the Red Roof Inn used real-time data on weather conditions and flight cancellations to connect with mobile users whose flights were cancelled due to bad weather. The Royal Bank of Canada used big data and analytics to gain insights from patterns in customer behavior, creating a customer touchpoint, for instance, when a customer starts using the online mortgage calculator, even if nothing else in the customer profile indicates an interest in a mortgage. The bank also conducted a pilot program, designed by the human resources and operations teams, analyzing employee opinion surveys to identify managers most in need of manager effectiveness training. Meanwhile, Ambyint is using big data to optimize oil well performance and help predict well downtime related to electrical storms, power surges, and other usually unpredictable events.
By working together, diverse stakeholders create these opportunities. Working together is also the only way to avoid several big data pitfalls. Is the cost of storing and processing data greater than the financial benefit (IT, finance, marketing)? How can cloud and on-premises applications and data be cost-effectively integrated (IT, finance, lines of business)? How can data sharing be optimized without running up against issues related to rapidly evolving regulations, such as the EU’s Global Data Protection Regulation (IT, marketing, legal)?
Find the right technology
Once you have a plan in place, you can seek out the right technology solutions. Many vendors want to capitalize on the “big data” and “digital transformation” trends, but the terms often mean different things in different contexts. As a result, it’s essential to work through the hype and deal only with trusted vendors who have a track record for offering solutions that deliver the promised return on investment.
The advantage of having a detailed, multi-stakeholder-approved plan in place before approaching vendors is that whether through research and case studies, or through a detailed RFP process, you can be sure the solutions you are considering—whether from a single vendor or best of breed—align with the specific goals you have set, deliver the capabilities you actually need to introduce into your infrastructure, and work with your existing technologies so you won’t end up with an expensive application integration nightmare.
Reconstituting an IT infrastructure in order to make big data work in your organization can seem like a daunting challenge. But by getting out of your comfort zone, soliciting input from all the potential stakeholders, and aligning your technology purchase to a concrete plan, you can successfully position your business to prosper in the digital economy.
Sean Hinton is the Canadian country manager for BMC Software.