6 Ways CIOs Can Stay Ahead Of Customers

The customer is still always right, but now the customer is always everywhere as well, using mobile apps and social media to find a better deal, switch brands, and publicly criticize your product.

Customer feedback (outrage) on social media forced Facebook to change its privacy policy and Netflix to even scrap an entire business model in the case of its DVD spinoff business, Qwikster.

"That new brand story you spent $18 million telling? It just got undercut by a single influential blogger compiling a list of 12 counter-examples that has been tweeted 1.2 million times and picked up by the newswires," writes Forrester CEO George Colony and research director Peter Burris in a report titled "Technology Management In The Age Of The Customer."

[Better figure out now how to meld your employees' social identities with their corporate ones. Read Beware The Looming Digital Identity Crisis.]

But empowered customers aren't just a sales and marketing problem; they're also an IT problem now. Although CIOs will continue to lead conventional IT groups in "support of the financial and operational guts of corporations," Colony and Burris say, they will also need to join forces with a powerful brethren born of the social and mobile customer, what Forrester calls business technology (BT) and what others have been calling "digital business."

Over the next five years, according to Forrester, spending on BT technologies such as mobile, data analytics, content management, and customer-experience software will increase, while spending on conventional IT such as network, supply chain, and financial, and HR systems will decrease as some of those systems move to the cloud. By 2018, the budgets for BT and IT will be about the same, according to Forrester, whereas today, IT accounts for 75% of technology management budgets.

Many CIOs are looking down the road. According to InformationWeek's 2013 Global CIO survey of 118 IT executives, collaboration with other departments and investment in new technologies are priorities.

When asked about what represents the main opportunity for CIOs today, the top two answers were "Use customer/business data to influence new products and services and drive growth" and "Move the company closer to its customers via technology."

Respondents cited web and mobile applications as the top two most important platforms to building closer ties with external customers.

A large majority of survey respondents report that collaboration with customer service, finance, operations/manufacturing, and marketing departments are all good or excellent.

Our 20 Great Ideas To Steal feature, based on our survey of InformationWeek 500 companies, illustrates plenty of clever, innovative examples of companies using mobile, social, and data analytics, and working with other departments to generate new sources of revenue and solve business problems.

Conversely, CIOs who stick too close to their IT infrastructure roots will face consequences as marketing departments lose confidence in their ability to grow the business. Thirty-two percent of 400 IT decision-makers surveyed by Forrester who work in marketing think that technology management at their company actually hinders business success. "If the CIO doesn't take the initiative to embrace and manage BT, other factions such as a chief digital officer will assert their dominion, resulting in confusion and turf wars," writes Forrester's Colony and Burris.

Based on InformationWeek's and Forrester's extensive research and interviews, we present six ways CIOs can apply a mix of IT and BT to stay ahead of their customers.

1. Ask for more BT money. CIOs aren't used to requesting higher budgets after years of cost cutting, and the CEO won't want to hear it, but investing more in BT can increase revenues and profits by attracting new customers and satisfying and retaining current ones. CIOs need to make that case, but expect pressure on IT budgets, whose business returns are far less apparent.

2. Manage your time better. By adding BT to an already full IT plate, CIOs will need to carve out more time for those customer-facing initiatives. Enter: the cloud. "Forrester advocates the continual movement of IT technologies into the cloud, a strategy that will free up resources that can be redirected toward building BT," Colony and Burris write.

3. Keep BT And IT on the same page. BT and IT might have different agendas -- IT focuses on keeping the lights on and containing business costs, BT focuses on attracting customers -- but a CIO must keep them connected because ultimately they both serve customers. A likely scenario is sharing staff in areas such as CRM and mobile app development that shape the customer experience. "Forcing artificial barriers between [BT and IT] will ensure organizational confusion and disjointed customer experiences," the Forrester report states.

4. Learn how to measure BT success. IT is measured in cost and efficiency, but BT gains are harder to quantify. The best ways to measure it, according to Forrester: customer metrics that track technology's ability to get and hold on to buyers (i.e., customers created per BT dollars spent); financial metrics that link BT to profit and revenue growth; and "systems of engagement" metrics that track BT's ability to pull in customers (how many leads are converted to customers and revenue).

5. Become partners with the CMO. No successful BT agenda is possible without the CIO and the chief marketing officer working closely together. In its report, Forrester references retail investment firm Vanguard's successful strategy of rotating IT staffers into marketing and marketing staffers into IT.

6. Create a common goal for BT, IT, and the entire company. All groups in a company have specialized skills. But in the "age of the customer," IT, BT and every customer-facing group in the company must all speak the language of CX: customer experience. "You need to rediscover tech management's CX muscles, and use them to build the software and systems of engagement that will make customers turn to you and away from your competitors," the Forrester report states.

The use of cloud technology is booming, often offering the only way to meet customers', employees' and partners' rapidly rising requirements. But IT pros are rightly nervous about a lack of visibility into the security of data in the cloud. In this Dark Reading report, Integrating Vulnerability Management Into The Application Development Process, we put the risk in context and offer recommendations for products and practices that can increase insight -- and enterprise security. (Free registration required.)