Digital transformation designed for the customer

Part business process redesign, part agile development, the new re-engineering is endless — just like customer demands. Here's how smart companies are learning to please customers one at a time, all of the time.

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Credit: Victo Ngai

In his three years at Valdosta State University, CIO Brian Haugabrook has made a habit of walking around the Georgia campus and stopping now and then to chat with students and faculty. But his intent is by no means purely casual. Rather, Haugabrook is conducting primary research for how to continually re-engineer IT to make the school more "customer-friendly."

On his earliest walks, Haugabrook noticed open workstations in the school's on-campus computer labs. He also noticed that students were moving into the dorms with as many as five personal electronic devices — phones, tablets, e-readers and more. "It got me to thinking whether we needed all these computers [in the labs]," Haugabrook says. It also got him to thinking that IT was out of touch with its primary customers — Valdosta State's 11,000 students.

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Brian Haugabrook, Valdosta State University

"IT was very internally focused, setting its own strategic plan every year. It wasn't involved at all in campus culture," he says.

Fast-forward to today. Some of the computer labs have been redesigned and repurposed. The campus wireless network has been upgraded extensively to include 1,600 access points, with coverage in student residences, auditoriums, classrooms and dining areas, as well as the pedestrian mall and the front lawn. Advanced caching capabilities allow local delivery of Internet content in the highest bit rate available, which means super-fast software updates and high-definition media streaming. Think Netflix and YouTube.

What's more, IT staffers regularly attend faculty and staff council meetings and gatherings of the student senate. IT also staffs an after-hours support service that makes on-site calls to student residence halls.

"Now, we are always thinking about the student experience and how to improve it," says Haugabrook, who still regularly strolls the university's 69-acre campus.

That's what's known as customer-responsive re-engineering.

More than 25 years after management guru Michael Hammer popularized the concept of business process re-engineering, organizations across all industries are at it again, only this time, neither business nor technology executives are calling the shots. Instead, it's customers themselves.

Before, companies looked for ways to improve internal efficiency. Streamlining things like order processing, manufacturing lines or payroll were ways to cut costs. Now, it's all about fulfilling customers' ever-escalating expectations — which more often than not are being set by consumer giants like Amazon, Apple and Uber.

Another key difference: This latest iteration of re-engineering is endless, just like customers' demands and whims.

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Doug Porter, Blue Cross Blue Shield Association

In healthcare, for example, "the expectations are becoming no different than what consumers expect in shopping transactions," says Doug Porter, senior vice president of operations and CIO for the Blue Cross Blue Shield Association, a national federation of 37 independent, locally operated Blue Cross and Blue Shield companies.

"If they can't get what they want in a couple of clicks, you're fired," Porter says.

The statistics bear this out. Users expect a website to load in two seconds or less, and they tend to abandon a site that isn't loaded within three seconds, says Kissmetrics, a San Francisco-based customer intelligence consultancy, in a blog post analyzing research by Akamai and Gomez Consulting.

Moreover, Kissmetrics reports that 79% of Web shoppers who have trouble with a site's performance are "less likely to buy from the same site again," and 44% of online shoppers would tell their friends about a bad online shopping experience.

In other words, fulfilling your customers' expectations isn't just a matter of competitive advantage; it's a matter of business survival. By 2020, customer experience will overtake price and product as the key brand differentiator, according to Walker Information, an Indianapolis-based consulting firm focused on customer intelligence. To be relevant in 2020, companies must emphasize "proactive and personalized service," Walker says.

What it takes

Companies focused on re-engineering around customers share several common characteristics. First, they don't think all customers are alike. At Valdosta State, for example, specific IT staffers are assigned to work with users in specific academic disciplines, and they receive training to help them understand their customers' unique needs.

Second, customer-responsive re-engineering involves continual change and improvement based on existing knowledge and customer feedback. For example, Vanguard regularly positions different services on its home page based on what it knows about particular retail clients online. The result: "We've seen as much as a 700% increase in adoption of those services over control groups," says John Marcante, CIO at the Valley Forge, Pa.-based financial services company.

A third differentiating factor among customer-responsive re-engineering efforts is that IT staffers involved tend to be especially knowledgeable about the business and industry in which they work, and they often are physically colocated with their business counterparts. At Janney Montgomery Scott, a Philadelphia-based financial services company, all IT project managers are required to take and pass the Financial Industry Regulatory Authority's Series 99 exam, which licenses them to perform a variety of operational functions for a broker dealer.

IT leaders and many staffers at these companies also have a high degree of interaction with the company's external customers, going out on sales calls and sitting in on customer meetings.

Here are closer looks at three customer-responsive re-engineering efforts.

Massachusetts Convention Center Authority

CIO Steven Snyder doesn't have a crystal ball, yet he's challenged daily to successfully respond to the needs of customers who will do business with the Massachusetts Convention Center Authority 15 years from now.

"What we're selling in this business is space and time in a building, out to the year 2030," Snyder explains. "We're selling not the technology that's in place today, but a mindset that we'll continue to invest in technology" so that the MCCA's three venues will have what customers are demanding more than a decade from now.

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Steven Snyder, Massachusetts Convention Center Authority

For example, customers who signed rental agreements for trade shows and exhibits five years ago did so before the Boston-based organization had wireless networking throughout each of its facilities. But if wireless connectivity hadn't been available when those meetings took place, the authority would have surely lost customers, Snyder notes.

"Networking is a core infrastructure piece for me," he says. "We're selling bandwidth" in addition to meeting space.

Just this year, the MCCA deployed 600 Bluetooth low-energy beacons throughout its facilities. The beacons enable smart devices to broadcast an identifier and their location so meeting-goers can find one another in the cavernous buildings.

"We can facilitate communications now so like-minded people can find each other," Snyder says. And since the system has an open API, "we're looking at other services, such as a panic button for public safety and better ways to route our service technicians in the buildings," he adds.

Pointing out that the authority sells itself as offering "the most technologically advanced convention center on the planet," Snyder says that "you really need to have something in your back pocket that makes it better to do business in Boston, especially in winter. We need to have an extra edge over Orlando."

To stay in touch with customers' expectations, Snyder regularly goes on calls with the sales team and meets annually with members of a customer advisory group that's focused on technology.

"I also spend a lot of time outside of my office in the show space itself," he says. "Getting out there and talking to [external] customers is a huge, huge benefit."

BDP International

BDP International hired Andy Santacroce two years ago as vice president of customer-facing systems.

Before that, the global logistics and transportation company "didn't have a focal area on customer-facing systems," he says. "We just had systems."

BDP's primary customer-facing tool is known as BDPSmart. It enables customers to do things like track global shipments, ensure their compliance with various shipping regulations worldwide and manage assets such as propane tanks or cargo containers around the world.

"We move data, and by us moving data, shipments move," Santacroce says.

All of these applications "were functional for quite a few years," providing customers with the capabilities they needed. But they weren't necessarily designed with the customer in mind, says Santacroce, now vice president of global IT at Philadelphia-based BDP. For one thing, the information they contained was not at all visual, so getting quick, dashboard-type updates wasn't possible.

BDP went directly to its external customers for input and, based on their feedback, the company not only re-engineered BDPSmart, but also changed the way it does business generally.

More notably, BDP categorized its customers by industry, providing industry-specific services to those in the chemical industry, life sciences and other sectors.

The re-engineering effort entailed some change-ups in the IT organization as well. Business developers were dispatched from IT to BDP's business units to gather customer feedback and new systems requirements.

Additionally, Santacroce hired user interface (UI) and user experience (UX) experts to assist with the design and usability features of the re-engineered BDPSmart system.

Before, he says, "we didn't have anybody in IT focused on UI/UX. These are people who think differently than [traditional] IT developers. They are people with a design rather than an IT background."

"We took a hard look at what our customers want to see and not what do we think our customers want to see, and then we totally refreshed the design of the application to make it easier for our customers. It now speaks our customers' language," Santacroce says.

He points out that the customer-responsive re-engineering effort paid off in the form of an increase in business from existing customers plus an increase in new customers.

BDP is now looking at making changes that are a direct response to younger customers' demands for more self-service features.

"As much as we can drive self-service, we are doing so," Santacroce says. "That derives benefits for us in terms of operational efficiency."

But the primary factor driving the change is the shifting demographic makeup of BDP's customers. "As the overall working population gets younger, there's more and more of a drive for self-service," he says. "So, yes, we gain efficiencies, but it's for much happier customers."

Vanguard

Vanguard manages about $3 trillion in assets globally, making it one of the world's largest investment companies.

Still, it services its customers one at a time, and in order to provide individuals with customized services, it amasses and integrates customer data from call recordings, accounts, social media and demographic databases.

The company has steadily evolved its client-focused systems design practices, from usability testing, during which it would bring clients to its computer labs for demos of prototypes and gather their feedback, to combining both high-tech (mainly big data analytics) and low-tech methods to best serve customers in what CIO Marcante calls "moments of truth."

"These are situations where stepping up the client experience would make a significant positive impact for the client and could represent a defining moment in the client's relationship with Vanguard," he explains.

For example, Vanguard employed design thinking principles to address the experiences of customers who are grieving the loss of a loved one.

"The team went out to funeral homes and also met with estate planning lawyers and paralegals in order to immerse themselves fully in the clients' total situation," he says. This process revealed critical places for Vanguard to focus its efforts, such as simplifying the paperwork and tasks families had to complete after a relative's death. It also identified ways to build empathy into the process, Marcante says. One example is advising clients to request multiple copies of the death certificate because they will probably need to provide original copies to many institutions as they work to settle their loved one's affairs.

Vanguard also has adopted agile methods, which Marcante says helps reinforce the client-focused mindset in IT. Many agile teams are colocated with the business groups that they work with, and these combined groups have regular access to clients.

"Instead of working off of a list of requirements, the teams work off of user stories and scenarios," he says.

Additionally, Vanguard has moved to a continuous delivery mode as a means of shortening the software development cycle. Marcante says this approach has helped bridge the gaps that can exist between business and IT, and it enables IT to be more responsive.

With internal users, "we are bringing client feedback directly into the software development life cycle by using an experimental test-and-learn approach to developing products — the so-called Lean Startup mentality.

"Once a feature is built, we leverage the data and analytics capabilities we now have to validate that the feature has achieved the intended outcome, or is making directional progress, and incorporate those learnings into the next features that we build," he says.

On the results side, Vanguard has seen client loyalty scores increase. An added bonus, Marcante says, is that "employee engagement has gone up as well."

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