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The nature of competition has changed. The battlefield of the future is the application of advanced mathematics to business problems. Things such as a transaction processing and just doing the business day in and day out have become the level playing field, and companies now will find competitive advantage and differentiation through the application of analytics to both structured and unstructured information and utilizing the vast amounts of digital data that are being created about our world and about ourselves every day." Carl Abrams, IBM Reserch Division business executive speaking with Harvey Koeppel in a soon-to-be released video entitled "Technology Insights Shape the Future of Business."

As Center members further explore applications of analytics in their organization, case studies,

frameworks and questions to analyze your organizational capability may be helpful.  These are explored in the new IBM executive report - Customer Analytics Pays Off - driving topline growth by bringing science to the art of marketing.

Once again the topic of social media. We all know the numbers. Campaigns in social media. Metrics needed. A different skill set. But what are really the results we should expect?

Marketing people are used to measuring customer satisfaction, market share, share of wallet, brand awareness, and many more. But what are really the results we expect from social media campaigns?

We had a great discussion during our Social Media webcast with center members two weeks ago.

We were made aware that campaigns, marketing activity in social media are different.

On one hand, communications are different. We are used to the one to one communication. A person or company giving a message and another one listening. Companies talking to customers in a personalized way.

We are also familiar to the one to many communications. Newspapers, television, radio, are all one to many. One company giving a message and customers listening and reacting.

All of us in technology had the information models, the analytical tools and the reports to analyze the one to one and the one to many communication campaigns.

CRM and all its strategy was about the one to one. Remember Martha Rogers and Don Peppers? Know your customers, segment them according to their needs, and then implement a one to one marketing strategy.

But what happens when communications are many to many? how do we analyze them? how do we segment customers? how do we know what they are thinking and what they will do? how do we implement the information models and the analytical tools to understand what their behaviors are? to predict future ones?

Marketing measurements should stay the same. Sales increase, market share, brand awareness, trial growth, share of wallet and share of customers, intent of initiatives, all of these are important.  Customer Satisfaction and customer experience awareness are all part of the main KPIs companies should track. Analyzing customer satisfaction and defining who owns the customer and who is responsible for customer communities cannot be ignored.

But they are definitely different when we include the many to many analysis. The social media campaigns and marketing activities are a different phenomenon that requires breaking paradigms, taking the risk of thinking differently and being able to analyze a different world.

Many to many is a bigger challenge. It implies we need to be able to develop a stronger capacity to listen. To analyze. To understand. We have to have different skill sets. Different measurements.

What are really the results we need to analyze for the business? what do we know better about customers? Their needs and expectations? how do we develop marketing and sales activities based on the results we get from the many to many analysis?

We might need to go back to mathematical models, to theorems that will let us understand the many to many relationships. The amount of information and knowledge we can get from these is immense. It is not about CRM, with the C being Customers. It is about Communities relationships management. CRM with a different C. Not just Social CRM. Behavior between networks and communities need to be understood.

All we need to do is go out of our current boundaries and dream. Then. we will be able to get the understanding and the value information from social media campaigns and marketing will bring us. And the first ones to do it, will have the go. They will get ahead of their competition and customers will be their own.

The Center recently hosted a virtual roundtable on an important topic to CIOs, Partnering to Drive Change through Analytics, where we explored how organizations are applying analytics best practices today, the business value that the best performing organizations are experiencing.

In preparing for the session, I developed some observations on the topic that I think provide a useful perspective for CIOs as you all consider taking action on getting value from leveraging analytics and creating business value in your own enterprise.

Not a new topic

In researching the literature prior to the session to provide some historical perspective on how far back this topic goes, I discovered that people have been talking about what we describe as this massive explosion of data, initially called information overload, for longer than many of us have been in this industry. From what I could ascertain, the earliest known attribution of the term “information overload” was credited to an IBM advertising supplement in the New York Times on April 30, 1961. So obviously this is not a new topic.

So what’s different now: more data than ever before

That being said, we are clearly at a new frontier of information overload and explosion of data, which is astronomically more challenging, but at the same time very exciting from the point of view of being able to impact the way we do business.

To put this into a context for today, I like to look at the retail industry, which is at the forefront of collecting massive amounts of data, and more importantly putting that data to use in changing the way they go to market, manage the customer experience, streamline the supply chain, and create the next generation customer. Walmart is often cited as a great example as a retailer leveraging data and analytics across all of these elements. A fact that I found particularly noteworthy - as of about nine months ago, Walmart was processing over a million customer transactions per hour, feeding databases that were estimated in excess of two and a half petabytes (roughly the equivalent of 167 times all of the books in the Library of Congress.)

Walmart has unprecedented insight into what their customers are doing, what they want, and how to respond across their 8,500 stores worldwide. At the same time, they need to find a way to translate that insight into actions that drive customer benefit and stakeholder value.

How should CIOs respond to this incredible opportunity?

“Revolutions in science have often been preceded by revolutions in measurement,” said Sinan Aral, a business professor at New York University, in a 2010 article in the Economist. He went on to say that just as the microscope transformed biology by exposing germs, and the electron microscope changed physics, the proliferation of data is turning the social sciences upside down.

I see that as representative of the conversation we as CIOs should be having now – how to apply this insight, these data, to become the microscope for how businesses can learn and advance ourselves and our industries. There are a few takeaways for me from Katharyn White’s presentation that I would encourage CIOs to consider in looking to manage these conversations.

• It’s a journey – the research presented reflects the evolutionary process of adopting, implementing, and embedding the value of analytics in the enterprise. And as Katharyn emphasized, the process of gaining buy-in and creating change is actually a core part of the implementation. In leading change management efforts myself over the years, I see that implementing analytics is the type of program that requires deep change across the enterprise, and core shifts in the way people make decisions, operate and go to market. CIOs can leverage their expertise in change management, as well as their enterprise-wide view of data and information, to make the journey more successful.
  

• Learn from others – the research also showed that companies can be successful getting to value across many industries; success in analytics is not industry dependent, or even geography dependent. There are companies of all types applying best practices and getting exciting results – whether it is in growing sales, increasing efficiencies, or improving individual customer interactions. Katharyn shared the view that success with analytics benefits greatly from a cross-industry perspective, and from seeking out examples from many other environments as a way to leapfrog in your own industry. This echoes my own experience – and that of the Center’s commitment to peer-sharing. CIOs should seek to systematically leverage learning from others to innovate in an emerging area like analytics.
  

• Leverage your C-suite relationships – by definition, getting value from analytics, especially as companies migrate from aspirational to experienced or experienced to transformed (as described in the research), clearly requires data or information to be collected across functional silos and/or across multiple business units. Whether or not the data collection and management moves to the point of being centralized within the enterprise, there needs to be an integrated and shared view of who is doing what, and how they data can be cleaned, verified and leveraged across the silos. This is an important opportunity for CIOs to leverage your hard-won C-suite relationships, and reach out to connect on an integrated view of the possibilities to move to value in your enterprise. One partnership in particular that Katharyn mentioned – the one with the Chief Marketing Officer – struck me as interesting for CIOs to consider. Analytics is at the forefront of where marketing and technology are coming together, and the partnership represents an emerging opportunity for CIOs to truly push the needle on analytics and how the company goes to market.
  

What are you doing in your organization to move the needle on the path value through analytics? What lessons can you share with others?

Yesterday, I attended the Center roundtable on Customer-Centricity and the discussion about the role of the CIO in leading the organization to be externally customer-focused prompted my thinking on the role of an IT Steering Committee in connecting the CIO with his or her executive peers to ensure IT is aligned with the business and the business priorities. On the call, I mentioned the concept of creating an IT Steering Committee, and I thought I would expand on that idea a bit in a post.

I teach in an IT course in an MBA program at a local university. At the start of each class I ask the students to go back to their companies and ask four questions:

1. Does the company have an IT steering committee to prioritize projects and who serves on it?
2. What is the % of revenue of IT spend?
3. What is the % of Capex expenditures for IT?
4. Does IT chargeout their services?

Each time that I ask, I get a broad range of responses to question one. They range from the CIO gets all the requests and decides what to do; the CIO makes all the decisions; the decisions are made by a committee run by the CIO; the CEO and the CIO make all the decisions and finally, the officers of the company meet on a regular basis and decide what should be done.   There are more variations but these are the major ones.

I can see the look of dismay that crosses the students’ faces when they see the myriad of approaches that are being presented by the students. After all, most of the students are non-IT’ers who are taking the course in order to learn how to work with the IT department. They are surprised at the diversity on something as fundamental as project prioritization.

Although I am not surprised by the variation, I continue to reflect on this situation. IT should have a set of basic operating principles which should be sacrosanct and universal among all IT departments. The makeup and the functioning of the IT steering committee should be one of them. In my judgment, the IT steering committee should be composed of the officers of the company and should be chaired by the CEO. Period. The only variation that I would allow would be to replace the CEO with the COO if appropriate.

Here are my reasons:

1. The officers of the company are the only people who have a complete grasp of the strategic plan for the entire corporation. They are the only ones who have the insight and the power to add projects, exchange projects or delete projects based on resources, budget and plan. Lower level executives should not be put into that position.
2. The CIO should never be put into the position of deciding priorities. If the CIO does this, then the CIO’s position is compromised relative to all the officers. In this scenario, the CIO is required to determine that one officer’s priority is not as important as another. Although the CIO may be right, it should not be the CIO’s call. The decision should be the consensus of the entire officer group based on the strategic plan. This approach is politically very dangerous for the CIO.
3. The CIO, as a member of the steering committee, is allowed to express views as to the appropriate automation agenda just like any officer may comment on their or any others requested project. Each officer should be able to defend his or her project before the committee.  The CIO should bring technical expertise to the conversation to either support or discourage the discussed project. The CIO must also be in a position to defend any large technical infrastructure projects.
4. This is the only way to assure that IT is aligned to the business. We still hear stories about IT departments not working on the projects that the company wants and needs. That cannot happen when the officers all participate in deciding what is to be done.
5. This approach avoids the “squeaky wheel” approach which allows powerful executives to dominate the automation agenda while less powerful departments are ignored even though their requirements may be more strategic.

We used this approach at my company for 25 years and it was very effective. Never once did someone come to me to ask why their projects were not getting scheduled. They knew that that decision rested, not with me, but with the IT Steering Committee.

Administrator’s note: CIO Members can listen to the archived recording of the Customer Centricity roundtable mentioned in this post.  You can also learn more about Customer Centricity by reading the Center’s research: Empowering the Business to Be More Customer-Centric: Lessons from Leading CIOs.