Why Digital Transformation Demands Customer-Focused IT

Pete Swabey

The IT department has an important role to play in the transformation of the customer experience, but for many, living up to that role will require a cultural shift.

Apple founder Steve Jobs put it well when he argued: “You’ve got to start with the customer experience and work back towards the technology, not the other way around.”

Unfortunately, many organizations have failed to take this on board. The IT systems that shape the customer experience are often designed to meet the internal needs of an organization and its processes and practices, rather than the subjective experience of current and prospective customers.

In the past, that was regrettable. In today’s highly competitive digital economy, it is nothing short of a liability. When customers can switch to competitors with the mere swipe of their thumb, providing a compelling customer experience is essential.

This uncomfortable reality has hit home with business leaders. In a 2015 survey by research company Gartner, 89% of companies predicted that their customer experience would be their primary basis for competition this year.

When asked to identify the primary objectives of their organization’s digital initiatives, 36% of executives surveyed by The Economist Intelligence Unit, for its SAP-sponsored Digitizing IT research program, list “improv[ing] the experience we offer customers and partners,” making it the third most common response.

The question of who should be responsible for the customer experience has been much debated. The marketing department is a logical candidate: marketers have experience in creating content and communications to elicit positive responses. Besides, marketing often runs the company website, email, and social media channels and customer-facing apps.

But the IT department clearly has a vital role to play, as the digital customer experience is influenced not just by these customer channels but also by the processes and back-end systems that support them. The requirement for specialist technical input will only increase as companies move towards more personalized experiences that reflect customers’ past transactions and in-the-moment interests, as this involves the integration of a variety of internal and external data sources and complex technical development.

A change of skills and mindset

For IT departments that have traditionally been more focused on the requirements of internal users than the needs of customers, living up to this role calls for a change in both their skills and abilities and in their mindset.

For example, IT departments need to develop their expertise in consumer technology, first so that they can advise colleagues in customer-facing departments on how technology can be used to achieve their customer-engagement objectives, and second, so that they can design back-end systems and processes to integrate with those technologies more effectively.

In addition, they need to adapt their mindset by shifting their focus from optimization and efficiency to creating customer value.

This kind of attitudinal shift is easy to prescribe but difficult to achieve, so IT departments should play to their strengths. One way to do this is through the use of data and analytics: as companies increase their interaction with customers through digital channels, the data they collect becomes an ever-richer source of insight into customer behavior and intent.

In the May 2016 earnings call, Marvin Ellison, CEO of US department store retailer JCPenney, told investment analysts that data analysis had helped the company understand a crucial shift in its customer base. “[O]ne of the great lessons from the challenges that this company faced in the past is that the leadership team did not embrace data,” he said. “It didn’t really leverage data as a way of helping to develop strategy.

“[W]hat the data tell us about customers is that we have really two types of customers: we have a current customer and an emerging customer. Now, the emerging customer is in her early-30s, she’s female, she’s multi-cultural, and she has kids.”

As this example shows, data analytics is a vital tool in deepening customer understanding. IT departments, therefore, have an opportunity to use their technological expertise not only to improve their own understanding of the customer but also to help the organisation as a whole to become more customer-focused.

The digital customer experience is becoming a crucial competitive differentiator. One of the IT department’s key roles in digital transformation will be to deliver customer insights that help the organization design market-beating experiences.

For more on giving IT the ability to help find new and innovative ways for the company to succeed, learn more about Digitizing IT.

This article was first published on Economist Intelligence Unit Digitizing IT site.

Pete Swabey

About Pete Swabey

Pete Swabey is a senior editor at The Economist Intelligence Unit's thought leadership division in EMEA; he is also global lead for the tech sector. He specializes in technology and has managed research projects on topics including digital transformation, the hyperconnected economy, the future of work, and the evolution of marketing. He has presented this research at a range of conferences and has moderated discussions at a number of The Economist Group's own events. Before joining The Economist Group in October 2013, Pete was editor of enterprise IT magazine and Web site Information Age and head of technology research for business-to-business publisher Vitesse Media.