Welcome To The Age Of The Customer! Eveline Oehrlich, Principal Analyst February 28, 2013

In the Age of the Customer, IT must enable rapid change across the value chain.

How Is The Age Of The Customer Redefining Competition? Agenda How Is The Age Of The Customer Redefining Competition? How Do IT Organization's Change in the Age Of The Customer? www.istockphoto.com

Digitally-empowered customers redefine competition in the Age of the Customer Source: June 6, 2011 “Competitive Strategy In The Age Of The Customer”

The Age of the Customer impacts all five of Michael Porter’s forces of competition Source: June 6, 2011 “Competitive Strategy In The Age Of The Customer”

The customer is in charge Bankruptcy $11B I was planning to start by telling a story of two companies…one that was obsessed with building and maintaining its vast network of stores, and one that was obsessed with customers and making it convenient to rent videos. But on Sunday night, that all changed. So to make my point, I’m going to ask for your help. Please stand up if you or anyone in your household has ever had one of these and been a Blockbuster customer. Please remain standing if at any time in the past you switched from Blockbuster to Netflix. Please remain standing if the reason you switched was mostly for convenience. Please remain standing if you are disappointed with Netflix announcement to break its service into two business – DVD and streaming. Source: Blockbuster store closing http://scrapetv.com/News/News%20Pages/Business/images-5/blockbuster-store-closing.jpg X $6.8B

Customers’ experiences drive success Trane empowers distributors to upsell and close deals faster An iPad app delivers content, sales materials, and documents The “ring to ching” close rate is 20% faster, 31%+ in revenue Analytics are built into the platform to monitor, refine, and reward Bruce Tansy, BI guy at Trane Cynergy did the app Source: Trane

Services eclipse products Source: http://www.timken.com/en-us/about/NewsRoom/media/Pages/Photographs.aspx Voice-over about business outcomes — a couple of data points — is revenue material, customer sat, competitive position

Users provision their own business capabilities — devices, apps, XaaS, … “How are the following technology sourcing functions currently shared between your company’s IT organization and your business group/department?” Base: 1,004 North American business decision-makers in firms with 1000+ employees Source: Forrsights Business Decision-Makers Survey, Q4 2011

Change moves to systems of engagement (Forrester estimates) Source: Forrester’s estimates of the mix of budgets © 2012 Forrester Research, Inc. Reproduction Prohibited

The datacenter’s core skill becomes business — not technology What are the 3-5 points to make — really accentuate — don’t spend too much time on this chart What is the “force at work” — what is the issue — overhauling the staff in the data center Simon — the picture and the title don’t match — can’t even control it anymore — tools, XaaP, . . . — change the headline? Dump the words on top of the arrows — how wrestle this to the ground — become a coordinator of the work of others use the dev-ops example — where are the investments going (more skills, agility, time- to-benefit, cut higher cost) Simple chart — not 50-box org chart — shift in capabilities — from-to — amount and type of labor content Change title to be datacenter Source: January 18, 2012, “Avoid Tactical, Narrow Service Management And Automation Strategies”

Threats and opportunities in the Age of the Customer: It’s IT’s perfect storm The customer is in charge Customers’ experiences drive success Services eclipse products Users provision their own business capabilities Change moves to systems of engagement The datacenter’s core skill becomes business — not technology . . . The customer is in charge — empowered by technology and information — Winning firms orient around their customers’ journeys, responding nimbly, flexibly, globally, and smartly Services eclipse products — following and enabling the customer’s journey Users provision their own business capabilities — through devices, Web sites, X-as-a-service, . . . Change moves to systems of engagement — to the edge of the technology stack so that core IT services become standard, automated, & consolidated The datacenter’s core skill becomes business, not technology — low-level technology capabilities are sourced, not built

In the past IT saw serial waves of technology evolutions like mainframes, PCs and the Internet impacting their businesses leaving sufficient time for digestion and refinement www.environmentreport.org

Industrialization Cloud Smart Mobile Social BYOD Big Data Real-time Agile Consumerization Technology evolutions are moving faster, clashing, overlapping and completing each other to create new challenges and opportunities. www.f1online.de

The Latest Big Disruption (Complexity) Consumerization Cloud Social Media Manual Ability Complexity Virtualization Theoretical Real Complexity Accelerant 2007 2008 2009 2010 2011 2012

The Business Hates Volatility www.f1online.de

The Business Loves If IT Adds Value But … Predictable Cost effective Productive Few surprises There are too many surprises in IT!

How Is The Age Of The Customer Redefining Competition? Agenda How Is The Age Of The Customer Redefining Competition? How Do IT Organization's Change in the Age Of The Customer? www.istockphoto.com

Old Service Management & The New Service Management

…focus on customer experience Stop Pushing The ITIL Kool Aid… …focus on customer experience

Top Performing Companies Set Different Priorities Flexible New IT Smart Social Old school IT

Welcome to the Industrial Revolution the next wave of ^ You can industrialize your IT – here’s how: Put discipline into your processes Engineer customer experience Reduce the MOOSE or let others do the “grunt work” Adapt the people (skills and org)

The New Faces Of IT Social IT Dynamic IT Smart IT Dynamic IT … dynamically supports business needs with internal & external resources and provides seamless access and support to all resources for business users all the time and anywhere. Social IT … connects business users with internal and external people and products to enable high performance, collaborative business processes. Smart IT … leverages technology to support business value and provides timely and contextual support to all business users.

New Engagement Models Dynamic IT Source: March 26, 2012, “Mobile Is The New Face Of Engagement”

IT (BT) is about systems of engagement — not systems of record Base: 1,004 North American business decision-makers in firms with 1000+ employees Source: Forrsights Business Decision-Makers Survey, Q4 2011 Source: May 16 2012 “Forrsights: Business Execs Increase Direct IT Spend To Support Systems Of Engagement”

Need To Define “Services”! Catering Need To Define “Services”!

What Is A Service? Service Service Service Business BRM Business service Service App Service I&O App owner Infra Service

The service (product) is key to industrialization! What’s The Service? Whatever is important to the consumer How do we define them (including SLAs)? Pursue service portfolio management A Service is constructed from sub-services The service (product) is key to industrialization!

The solution: Firms like P&G drive business-service-value Procter & Gamble is known for its leading consumer products and its marketing prowess — and they yield results: revenue grew 10% for their fourth, ending in June 2011, over Q4 2010. P&G is famous for brand management — for knowing its customers and how to bring product to market. In fact, many MBA programs go to school on P&G. But P&G isn’t standing still — and [CLICK] Filippo Passerini — Group president of P&G’s Global Business Services organization and CIO — is relentlessly pursuing innovation, including collaborating with marketing to drive customer knowledge and responsiveness across the enterprise and the value chain. One striking example of this is the Virtual Modeling And Simulation Service, part of the “Product Innovation Capabilities” service line. The challenge for the Virtual Modeling and Simulation Service is to accelerate the speed of innovation-to-market — and key to this is knowing what the customer wants and responding to that knowledge. Traditional customer testing through physical mockups used to take 6-7 weeks [CLICK] Passerini’s photo source: P&G Filippo Passerini, Group President of Global Business Services and CIO

Customer testing used to take 6-7 weeks — limited by cost and time When a new product is coming to market, the traditional approach was to do physical mockups of products to test customer reaction to art work, packaging, merchandising, etc. But the 6-7 week cycle time was way to slow and costly. The cost and time meant less complete testing and slower response to customers Enter the Virtual Modeling And Simulation Service [CLICK] Source: http://images.businessweek.com/ss/08/11/1106_dividend_aristocrats/image/20_procter_gamble.jpg

Virtual reality now allows more customers to review more options in days — not weeks This team have changed all this, using virtual reality to provide marketing with end-to-end business capabilities that are integrated into P&G’s overall go-to-market processes. When brand managers want to do testing, they request the services from the Virtual Modeling And Simulation Service team — resulting in a virtual testing environment within hours The speed is a result of Virtual Modeling And Simulation Service team’s work across the product marketing organizations to build a library of virtual tools that enable rapid delivery The testing isn’t limited to P&G’s direct marketing. Virtual Modeling And Simulation Service team also involves retail channel partners like Wal-Mart and Target — to assure that customer responsiveness reaches across channels and across the customer life cycle. And to assure technology innovation is at the edge, Virtual Modeling And Simulation Serviceteam focuses on the business while technology partner Accenture delivers new capabilities. 80% of products going to market use the virtual testing — 100% of the tier 1 products. And the virtual consumer testing is integrated across the enterprise and across the value chain The result? [CLICK] Higher product success rates due to broader testing Faster time-to-decision A greater number of alternatives reviewed And a broader number of products tested Source: P&G Better insights and higher success rates when P&G engages more with the consumer.

Dynamic through automation IT Dynamic through automation Tools that perform functions otherwise done by humans Task Execution Individual tasks Repetitive tasks are candidates Process Flow Connects tasks and decisions Workload automation and RBA Decision Trigger Analytics (not just monitoring) When and why to take action © 2013 Forrester Research, Inc. Reproduction Prohibited

Turbo Charge Your Service Processes Social IT

Some clients still don’t realize the importance of service support, field support, business enablement… Image source: http://www.anorak.co.uk/wp-content/uploads/cleaning-window-3.jpg

Turbo Charge Your Service Support Processes Social IT Social Web Service Catalog Service Desk Mobile Device Browse Community Forum, Facebook, etc. Chat with service agent Resolve/ Request/Troubleshoot issue Transfer to service desk agent. Browse enterprise service catalog. Receive details via SMS Email service desk agent. Navigate support via smart device Source: August 2011 “Turbocharge Customer Service Process With Social Technologies”

The Number Of Tablets x10 In 5 Years Source: April 23, 2012, “Tablets Will Rule The Future Personal Computing Landscape”

Tablets Are Cannibalizing Pcs Source: April 23, 2012, “Tablets Will Rule The Future Personal Computing Landscape”

IT Industrialization Is Changing The People Smart IT IT, as we’ve known it, is dead Many skills are diminishing New skills are emerging as highly desirable New sourcing models — don’t do it all yourself Organization structure will be in constant flux IT Industrialization Is Changing The People

New Talent, Organizations, And Processes Smart IT New Talent, Organizations, And Processes August 2011 “How To Become A BT Leader — And Leave IT Order-Taking Behind”

Hire, rewire, or redeploy to fill the needs Hot New Roles Emerge Business relationship manager Automation architect Service designer Service manager Service brokers Vendor manager Hire, rewire, or redeploy to fill the needs

Conclusion!

IT’s actions in the Age of the Customer Focus from the customer in — on understanding and responding to customers – use automation when possible. Concentrate on systems of engagement — minimizing changes to the systems of record. Refine service management processes to meet your customers expectations and industrialize your value chain.

Eveline Oehrlich, Principal Analyst eoehrlich@forrester.com

Reference reports from Forrester “Forrsights: Business Execs Increase Direct IT Spend To Support Systems Of Engagement” May 16 2012 “Mobile Is The New Face Of Engagement: An Executive Summary” March 2012 “Empowered BT Redefines The Traditional IT Archetypes” February 21 2012 “Avoid Tactical, Narrow Service Management And Automation Strategies” January 18, 2012 “Empowered Business Technology Defined” July 18, 2011 “Competitive Strategy In The Age Of The Customer” June 6, 2011