Forrester Says CIOs Must Focus on Customer-Facing Innovation

Posted by Mark Troselj, Vice President and General Manager, ANZ, NetSuite

CIOs spend a good amount of their budgets – on average 30 percent – on technology-related innovation, according to Forrester Research, but is that money being spent on areas that will truly make the business more successful?

Not enough of it, according to a recent Forrester report, “The CIO Mandate: Engaging Customers with Business Technology,” published on 18 March 2015, which surveyed thousands of global business and technology decision-makers from companies with 100 or more employees in Australia, Brazil, Canada, China, France, Germany, India, New Zealand, the United Kingdom, and United States.

To become more strategic to their businesses, CIOs need to extend their focus from improving operations and enhancing the experience of their internal users (where roughly 22 percent of that budget goes now), to proposing and implementing technology that enhances the experience of their customers, according to Forrester’s report.

We’re seeing similar trends ourselves in Australia and New Zealand. Once charged with simply “keeping the lights on,” CIOs here are being asked to play a far more strategic role in business direction and growth – delivering innovative solutions like modern ERP software that ensure measurable returns in business value and competitive advantage from IT investments.

Yet, right now, according to the report, IT devotes too much time and attention to back-office systems, lacks strong relationships with executives in customer-facing roles, and doesn’t have the skills to deploy so-called business technology – systems and processes that win, serve and retain customers.

Meanwhile, the customer experience, which Forrester calls the “new engine of business value,” takes a back seat. CIOs need to think and act like product managers – constantly considering what customers want, how to get it to them, and how to capture information that continues to enhance their experience in return. CIOs that fail to adopt this point of view risk slipping into irrelevancy in the eyes of the business (some 40 percent of business decision-makers surveyed still viewed IT as an impediment to accelerating business success), according to the report.

“Technology-fueled, customer-led disruption will continue to arrive unexpectedly on your doorstep,” Peter Burris, the report’s author, writes. “From [the customer’s] point of view, your business is technology and technology is your business -- so either CIOs deliver, or someone else will.”

One of those disruptions, the Cloud, is freeing up CIOs from having to maintain data centers with their hardware refresh lifecycles, patches and application upgrades. Indeed, Frost & Sullivan, in a survey of 1,500 senior executives, identified four drivers of change in APAC and cites cloud computing as a means of adapting. Guzman y Gomez, is one example in Australia. Cloud ERP has enabled the chain of Mexican restaurants to expand internationally.

A Shift Required in IT Mindset

Unlike the systems for its internal users, technology for customers must be built from the outside, in. This shift requires CIOs to lead teams that are comfortable with agile software development over waterfall approaches, so that technology can be responsive to changes in both customer sentiment and to different phases of the customer’s journey with the brand. A strong-set of APIs and integration of customer intelligence will be particularly important in this regard. In turn, IT teams need to focus on business outcomes, and not service-level agreements, as key indicators of technology ROI.

It won’t be easy. This new user is significantly harder to please than the old one. Employees could be (more or less) coerced into using technology that IT implemented; customers can’t be. CIOs must work with customer-facing executives to not only build technology customers can’t resist, but to market, sell and service it.

What Technology Journeys Lead in Importance?

The good news? Improving customer experience tops the priorities of business budget decision-makers, even ahead of growing revenue and reducing costs, according to Forrester. And they’re looking to software to do it -- mobile, analytics and vertical SaaS solutions in particular. More robust ecommerce systems, mobile technology with rich integrations into data in the back-end systems for those in sales and customer-facing roles, and technology embedded into the products the company sells (that transfers back information on service issues, performance and more) are all key focus areas for enhancing customer engagement.

These “systems of engagement” provide unique customer experiences and are easy for customers to adopt, all while integrating complex information from systems of record. CIOs who develop models where data is consistent, but experiences differ across the spectrum of the customer journey will win. They’ll create experiences that engage the customer with the brand, while enabling the business to learn more from the customer and in turn build more brand loyalty.

In all of this, the CIO finds him or herself on the cusp of an era of crucial relevance to the business. For those who evolve their attitudes to meet and exceed the demands of their new customers, their importance to the business will only continue to grow.

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