How data, subscriptions and new business models are transforming the CIO's relationship with the customer.
Way back in the digital mists of time — say about 2008 — the CIO’s team had little connection with the customer. IT’s role was to act as a support function for others parts of the business, hosting the website designed by marketing or choosing the software for the customer support desk.
But just as emerging technologies have disrupted entire industries, they are also upending the relationship between the CIO and the customer. Just think of the great disruptors in retail, taxi services and hotels — they outcompeted legacy firms by providing a data-driven customer experience. Today’s CIOs cannot ignore these new customer responsibilities.
Here are some examples:
An HVAC firm’s salesforce used to sell climate control units on a five-year cycle, with minimal contact with the customer between sales. But since attaching sensors that track usage, cost, maintenance, time of use, regulatory adherence and other variables, the CIO’s team understands more about the customer than the sales rep, more precisely and in real time.
A supply chain software firm moved from shrink-wrap perpetual licensing to cloud-based subscriptions. IT now joins marketing and sales on the front-line of customer-facing issues, such as product delivery, customer churn and upselling of the product.
A medical device company launched a smartphone breathalyzer that tracks alcohol use by location, time and facial recognition. Suddenly, the CIO is in charge of a customer-facing business that sells critical data analytics to insurance companies and law enforcement.
We’re now reaching a tipping point in customer experience. Technology is being embedded in core products. Customer contact is defined by analytics. And customer feedback is captured in data. So, what’s next?
The Customer-Centric CIO
CIOs and their teams are becoming critical contributors to the new customer experience. Here are five steps that a customer-centric CIO should take to meet these new responsibilities:
Consider creating a Chief Customer Data Officer role. Valuable customer data is flowing in from store kiosks, help desks, sales reps, mobile phones and a dozen other sources. The technology analyst firm IDC projects a 10-fold increase of data by 2025 to 163 zettabytes — the equivalent of 40 trillion DVDs. Yet, they also predict that only 15% of this valuable data will actually be tagged and analyzed to be made useful.
Make it someone’s day job to get their arms around this massive flow, and to turn it into deep customer insights. Given the data-intensive nature of the job, the Chief Customer Data Officer (CCDO) should report to the CIO, but with strong dotted lines to sales, marketing and CRM.
Create a digital customer feedback loop. Most companies still rely on sales rep meetings, focus groups and gut instinct to understand their customers. These still have their place, but they need to be supplemented by hard data on transactions, complaints and behavior. These dashboards, algorithms and analytics can only be driven by the CIO.
Here’s an example: a major retailer set up a “Black Friday War Room”, with data links to points of sale, salespeople’s tablets and warehouses. This enabled them to meet customer needs by shifting inventory between stores over the course of the 24-hour shopping day, and even to create dynamic pricing to match demand.
Assume the role of an evangelist for new technologies. New technology solutions — such as artificial intelligence (AI), personalization and voice recognition — are going to reshape the customer experience. Busy marketers and salespeople, however, may not be the ones to recognize their potential. The CIO (and perhaps the new CDO) should become the prophets and predictors of customer-centric technology.
For example, the flexibility and configurability of the Internet of Things can enable customization of products and orders for key customers. The sales function and even the product design group won’t spot this. It is the responsibility of the CIO to evangelize these opportunities.
Spot the new revenue-earning opportunities. Take another look at the HVAC firm mentioned above. The company audited the new data it was collecting. It then asked: “How is this data valuable to our customers?” This led to the conclusion that it could enter a new business, client energy management. The firm then teamed up with local utilities to provide off-peak energy services, with an entirely new business model based on shared energy savings with the client.
The Chief Investment Officer is looking increasingly like the Chief Customer Officer. Data is the new product, and analytics are the new services. The forward-looking CIO will need to take a proactive stance in building the new revenue models emerging from technology.
The CIO — new guardian of the data? There is a further, compelling reason for the CIO to think about customers — the threat of a cyber-breach. It can take a generation to build trust with the customer base, and a potent cyber-breach can destroy that trust overnight.
Only the CIO’s team has the expertise, standards and focus to protect the customer base from its greatest threat — this is perhaps the most important customer-centric duty of the CIO’s team.
The rising tide of technology is placing extraordinary new demands on CIOs and their teams. But as their responsibilities evolve, I urge CIOs to place a high priority on activities that touch the customer. These are the critical paths that can expose the business to competitor disruption. These are the opportunities with high ROI. These initiatives are the future of your company, and the future of the CIO.
Dave Padmos is EY Global Technology Sector Advisory Leader with over 25 years of consulting leadership, client service expertise, industry insight, and IT knowledge to clients in the technology, media and public sectors.The views reflected in this article are the views of the author and do not necessarily reflect the views of the global EY organization or its member firms.
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