Editor’s note: Faced with declining IT budgets during the recent economic downturn, many CMO’s turned to Software as a Service (SaaS) to fill the gap left by an underfunded and overloaded IT department. This kicked off a battle for budget, strategy and control that continues to heat up in most enterprises. In this piece, Brad Power addresses ways to bridge that gap in perspective on the term ‘customer’ between Marketing and IT.
Quick: when someone says “IT,” what comes to mind? Usually, people think of the systems they use as employees inside organizations — not customers. Here’s a familiar story: Marketing conducts research (“Big Data“! “Analytics“!) and uncovers new customer insights; it then turns to operations to translate the insights into action…and hits a wall. The people in operations are too focused on fulfilling internal requests and service agreements to worry about customers, the ones that pay real money.
This classic breakdown between marketing and IT is being bridged at a few leading companies such as ING, the Netherlands bank. ING’s customer intelligence group does market research and “database” marketing — they develop sales campaigns for targeted customers. Kim Verhaaf, director of customer intelligence, told me: “A few years ago customer intelligence was mainly about finding customers for our products in order to push sales and conversion rates. The financial crisis changed the market conditions for banks and also people’s attitudes towards banks. The Dutch market changed from a ‘grow with the flow’ market to a ‘battle for share’ market. And in a highly competitive market, emotional preference becomes important.”
To learn more about emotions, the customer intelligence group took several banking products and processes and measured customers’ reactions to them. They found that their offerings trigger more emotions than they had realized. Some provoked positive feelings, but some also prompted frustration, anger, and stress. They also found that customer satisfaction does not depend solely on the functionality of a product or service; it can depend on reliability and ease of use. Verhaaf said they realized that “to create more positive reactions and build trust with our customers, we really need the help of IT in changing our products and processes.”
While the customer intelligence group was learning about customers’ emotions, Ron van Kemenade, the new chief information officer, was learning about ING’s IT organization. He found IT to be completely detached from anything like a real end customer. The IT group treated the internal organization as their customers, rather than the actual bank customers. That meant that they were focused on delivering internal processes. For example, through a standard process model for IT (ITIL), they had identified the incident management process, (an incident is a customer problem), and were happy that 80% of incidents were resolved in two hours. But nobody looked at statistics that showed that incidents were increasing. And nobody looked at what these incidents were doing to the bank’s customers. When they looked at the real customer impact, they realized they needed to reduce incidents dramatically. They started with 1,000 incidents per week. This was a surprising and scary number for their CEO. By focusing on reducing incidents, they got them down by 40% to 600 per week in a year. Van Kemenade: “In our most recent report we are down to 450 per week. Customers can now depend on a more reliable bank, which is helping us regain their trust.”
How did marketing and operations at ING learn to marry these customer insights and operations? Answer: Cross-functional collaboration using “Agile Scrum.”
As I described in a previous post, ING’s IT organization has been transitioning from the traditional development approach of (1) define functional requirements, then (2) design, then (3) build (the “waterfall” approach) to making quick, small changes to systems (“Agile Scrum“). Ron van Kemenade: “Our focus on customers has led us to reduce our development cycle from months to days. We’ve moved from a project orientation to continuous delivery, applying Lean Six Sigma approaches.”
Agile and Scrum have allowed ING to respond quickly to signals from customers. But moving to continuous delivery is a struggle. Some business people who are used to the traditional waterfall method can fall into an unfortunate cycle: taking months to develop requirements, then waiting for IT to respond, then telling IT that’s not what they wanted. Now instead at ING they say, “Here’s your team. You need to be in every daily or weekly Scrum cycle or sprint to decide if the work is meeting your needs.” It demands more time from the business people, but they are engaged and own it.
While Scrum has been employed primarily in software development, ING shows that it has broader management applications. They have used Agile Scrum as a key tool for collaboration across functions in processes such as developing new products and in marketing campaigns. And the frequent (daily or weekly) meetings accelerate decision-making.
Historically, people at ING were either internally focused or externally focused. They worked either to increase efficiency or to address customers’ emotions. They have learned that to be the preferred bank, they have to do both at the same time. And that requires close and constant collaboration between marketing and IT.
This article first appeared on the Harvard Business Review and has been lightly edited.