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April 5, 1999

IT's Role In Bringing The Customer Into Focus

By Charles Pelton

t's no accident that InformationWeek magazine has published at least four cover stories in the past year with the word "customer" on the cover. Last March, in "The New Age of the Customer," we brought together sales-force automation, data warehousing, call-center, and Web technologies to demonstrate how companies were better serving both business customers and consumers. In "Customer Contact," published on June 1, 1998, we profiled the proliferation of Internet customer-service technologies.

In our July 20, 1998, profile of Prudential Insurance, "Customer Touch," we analyzed how--and whether--the 123-year-old firm could break down the silos between its five main lines of business and reorient itself around the customer. And last week's "Customers Who Count," explored how data mining technologies are helping businesses identify and nurture their most profitable clients.

That so many businesses are reorienting their business processes and IT infrastructures around the customer (and not simply espousing the decades-old maxim of "Customer First" or the practice of "getting close to the customer") is no surprise. It's the speed and the completeness with which companies are reorganizing themselves that's surprising.

In the 700-person research project (conducted in January with 500 IS titles from InformationWeek and 200 business titles from Dun & Bradstreet) that formed the underpinning of our current "Redefining IS" nine-city road tour, we found that the "corpographics"--or corporate psychology--of nearly 80% of respondents centers around the customer. This is true across the board--even in manufacturing industries with a stubborn legacy of product-driven thinking.

If you look at the history of IT over the last decade, this reorientation makes sense. Just as PC and networking technology has become standardized, so have many of the business functions run by software programs--from productivity suites to payroll systems to other back-office (general ledger, accounts payable, etc.) functions. Many larger businesses--and more fast-growing smaller ones--have installed ERP, fulfillment, and logistics systems.

If you run SAP, you no longer have an instant advantage over your competitor. In fact, installing an ERP systems has become a necessary ticket--albeit an expensive one--just to get in the game.

So the new competitive battleground for many companies now revolves around customer-relationship management and kindred technologies including sales-force and marketing automation, call-center technologies, and voice-response systems. Near-ubiquitous use of the Internet means that consumers and business customers have a direct eye into the enterprise. This ever-so public face of the enterprise forces other business systems to reorganize around the customer. Think of the technologies that serve the information needs of the customer and about the customer--from storage to networking, from enterprise-integration software to business- intelligence tools.

What our Redefining IS survey revealed most fundamentally was an attitude about doing business that's become more customer-focused than ever. Attitude is not behavior; it represents potential in behavior. And action follows attitude.

Of all the attributes that separate the most customer-oriented businesses--call them the "committed" group--from those who are merely "interested" in being more customer focused, none was more dramatic than the level at which the committed group spends money on IT products and services. The committed group spends twice as much on IT--about 11.3% of annual revenue--compared with the interested group. At a company like discount brokerage Charles Schwab, for instance, IT represents 16% of revenue, a figure that's due to rise to 18% in the coming months.

But how do you create a truly customer-focused business? How does increased, but targeted, IT spending translate into increased shareholder value? The answer lies in the degree to which IT provides thought leadership in the organization. Since technology is the key to this kind of change, it only follows that technology decision makers need to bring more business ideas to the table.

Redefining IS research shows this to be the case. In all, 52% of the respondents from the InformationWeek portion of the survey say they bring ideas to the business all or most of the time. That's up from 40% in 1998 and 26% in 1997. Moreover, IT's business partners largely agree: Some 43%-- nearly the same proportion--say their IT partners bring projects to the business.

That leadership must and will grow. IT is truly the agent of change and innovation when it comes to harnessing the tools and processes that provide a true customer focus to business.

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