The Amazon Test: Companies Pay Up To Pass - InformationWeek

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IT Leadership // IT Strategy
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Chris Murphy
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The Amazon Test: Companies Pay Up To Pass

Is your technology up to consumer web standards? New CEB data shows companies investing more in customer-facing tech projects.

For years, IT organizations have faced the "Amazon Test," the idea that people -- employees, partners, customers -- compare your company's IT systems to the very best consumer apps and websites they use, not just to other business-oriented systems.

Most IT organizations have fallen short.

What's changing today is that companies are starting to really care if they fail the Amazon Test, rather than just giving the idea lip service.

[How can consumers be won over to the Internet of Things? Read Survey: Consumers Don't Get IoT, But They Will.]

The reason: Customers are using a company's technology -- an e-commerce site, a customer service page, or tech embedded in the product itself -- in so many new ways, and in such high volumes, that bad performance has clear profit-and-loss fallout. Customer-facing systems face a much higher standard than employee-facing systems.

CEB, a consulting and research firm, just came out with its 2015 budget forecast, and it sheds some light on this change in thinking. Broadly, CEB finds that IT organizations are more bullish than they have been in years, expecting IT spending overall to rise 3.3% in 2015, compared with as low as 1.8% growth just two years ago. The forecast is based on data from more than 200 companies.

One area on the rise is IT spending on the end-customer experience. Among spending on all IT projects, 17% will be on end-customer experience, up from 15% last year. (See this article for examples of consumer-facing technology from esurance, La Quinta Inns, and Insurance Auto Auctions.)

IT is hiring differently to meet the customer-facing demands. Forty-five percent of IT shops expect to have a dedicated user-experience role in their organization by next year. IT used to contract for that kind of design talent as needed, rather than having permanent staff, says CEB managing director Andrew Horne.

Horne offers three reasons for increased investment in customer-facing technology:

  1. "More and more, industries are realizing the channel or the product itself is going digital," he says.
  2. "As that happens, there's a sense that if technology faces the customer, it has to be better."
  3. With so much at stake, business unit leaders "are paying a lot more attention to that technology, and even spending their own budgets on it."

Because of that third point, 17% of the IT project budget probably underestimates the full amount companies are spending on end-customer experience, Horne says. If the marketing department develops a simple mobile app, or the customer service group hones its self-service website, the IT organization might never learn about that spending. (CEB finds that the finance, HR, and marketing departments each spend, on average, 4% or more of their own budgets on technology.)

The importance of consumer-facing tech no doubt helps fuel that bullish forecast of a 3.3% increase in IT spending next year. It's easier to spend on data center improvements when you think of it as directly driving customer sales and satisfaction. Movements such as DevOps are driven by the need to meet tech-powered customer needs sooner.

Is your company serious about the Amazon Test? And will your 2015 IT budgets prove it?

If the world wasn't changing, we might continue to view IT purely as a service organization, and ITSM might be the most important focus for IT leaders. But it's not, it isn't and it won't be -- at least not in its present form. Get the Research: Beyond IT Service Management report today (free registration required).

Chris Murphy is editor of InformationWeek and co-chair of the InformationWeek Conference. He has been covering technology leadership and CIO strategy issues for InformationWeek since 1999. Before that, he was editor of the Budapest Business Journal, a business newspaper in ... View Full Bio
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User Rank: Apprentice
11/5/2014 | 12:01:38 PM
Corporate area spending on tech
I found this part of the article interesting:

"CEB finds that the finance, HR, and marketing departments each spend, on average, 4% or more of their own budgets on technology."

It is easy to forget that internal users are also customers.
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