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3/6/2013
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Goodbye IT, Hello Digital Business

Delighting customers is job No. 1. Everything else is secondary.

Walgreens Goes Mobile

Almost 70% of the IT executives we surveyed see mobile apps as important to building customer ties.

Walgreens decided in 2009 to make a concerted mobile push. First came a simple text message service: Text me when my prescription's ready so I can roam the store rather than sit and watch the pharmacist count pills. More ambitious was the smartphone app to let people order a prescription refill from home and then pick it up in the store.

But initial adoption lagged. "The worst sound is silence," says Dhar, the CTO. The problem, the team decided, was that the app required customers to log in. Why? Well, because that's what apps do. But people don't need to log in to anything before they phone in a refill. "We said, let's make it ridiculously easy," Dhar says. Gone is the refill login, and today 52% of Walgreens' online refills come via its mobile app.

Photo printing is another place where mobile has blurred the lines between channels and spurred new approaches for Walgreens. Last summer, it released an API and SDK to let independent developers embed Walgreens' printing service in their photo-editing smartphone apps. Developers get a cut when an app user sends a photo for printing at a Walgreens store. In 2010, less than 1% of Walgreens photo prints came from mobile devices. Today it's 15%.

Sona Chawla, Walgreens' e-commerce president, has a "digital customer experience" team looking at what people want in this store-online-mobile world. Walgreens is testing a service that lets people order online and pick up at a store within an hour. But there's more to do. As at most retailers, there's no simple, automated way for customers to "tell" the store they're there, perhaps to receive a customized promotion or reminder on their smartphones. Walgreens has experimented with Foursquare check-ins, donating flu shots for people who checked in to say they were getting vaccinated at a Walgreens.But Chawla knows that the company needs to do more to build digital ties with customers using customer data. "If you know me, show me you know me," she says.

Brady's first mobile app, which is in pilot tests, again shows the blurring of new and old sales channels. A customer can order a product just by snapping a picture of it, and the app sends that picture to a Brady call center rep, who can quickly find and order it. The app doesn't need to link to a product catalog. And if the customer is ordering a rival's product, the rep can suggest an alternative that Brady carries.

The People Challenge

Brady's experience shows how a more customer-focused IT organization often requires retraining as well as new hires, and often layoffs of people who don't make the transition.

Among our survey respondents, hiring is on the rise: Just over half say their companies expect to staff up across many areas (20%) or for specialized skills (32%) this year. Just 3% are more likely to lay off than hire, while 29% have frozen hiring.

Brady went to the cloud for many of its enterprise applications -- Salesforce.com CRM, Workday HR, Google Apps collaboration -- in order to move people from app support roles to more innovation work. But it still needs people with expertise in SAP. If it's going to expose inventories to customers through Web and mobile apps, it's on-premises SAP applications become customer-facing systems. Still, some people will feel like they're doing yesterday's IT instead of the new and cool customer-facing tech. "It's hard," Curran admits.

Walgreens, which has its headquarters in the north Chicago suburb of Deerfield, opened a downtown Chicago office to attract the creative talent it needs for its digital initiatives. "You want to be where the talent is," Chawla says.

True Value has been moving from a wholesaler mindset to a retail focus, and IT is part of that cultural shift, says CIO Rosalee Hermens. It lets shoppers buy online and ship to the store, since the retailer's research finds that online shoppers will typically spend three times more money if True Value can get them to visit a store. Now its IT team is working on being able to tell customers the inventory in each store.

To do all this, Hermens needs people who understand the True Value customer and are comfortable getting out and working with store owners to learn what they need. That work is different from the IT development for store owners and employees. "We operate in this realm of our work like a software development company," Hermens says.

Across industries, companies are learning how different developing software for customers is from developing software for internal users. Employees "have an obligation to use your software," Walgreens' Dhar says. "There's something very different when there's no obligation to use your software."

Is IT up to this customer-centric challenge? Sixty-one percent in our Global CIO Survey say their companies have a rising number of growth-oriented projects, compared with 13% who see a declining number or no such projects. In terms of total IT spending, 57% of execs expect to spend more this year than last, while only 14% expect to spend less. What's changing is where companies spend those tech dollars. "We're in the customer age," Curran says. "The 'standardization of process' and the 'upgrade of ERP' age is past." Those activities are still necessary, of course, but the energy is around customer-facing tech.

chart: How does your IT team interact with customers?

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