Thursday, September 1, 2011

Marketing for the management of IT


In this blog post I will outline briefly how the management of IT can benefit from applying concepts used in marketing. Though many concepts are already used in one way or the other, it makes you think differently and address your challenges from a different angle.

One of the key challenges of managing IT for an organisation is the alignment with the business and achieving a satisfactory evaluation by the internal customer. In the past we used to say that we needed to do our own internal marketing when we felt undervalued. The big mistake we made then (as many do), is to equate marketing with promotion.

Many IT teams have taken it upon themselves to promote the reasons why they have to do things and to promote their achievements. However marketing is more than promotion and by studying the complete marketing processes, there are certain aspects that can help making IT more successful in an organisation. Though I must say, some challenges will remain since there are some specific aspects to IT management that are not easily addressed from the marketing lessons due to the fact that you are simply an internal department of the organisation. Your customer is also your boss.

As a reference relating to marketing, I will use the book “Marketing – an introduction” by Gary Armstrong and Philip Kotler published by Pearson and this defines marketing as follows:

Marketing is the process by which companies create value for customers and build strong customer relationships in order to capture value from customers in return. For your IT organisation you would need to substitute “companies” with “the IT department”.

This definition raises some issues. “Create value” is easily understood but in essence the objective of marketing is to create “customer delight”, “build customer relationships” and “customer equity”, meaning that you should go beyond just satisfying the customer. The customer really should like your services but not only that, your customer should actually like engaging with you and even wants to invest in you. Just look at the loyal fans of Apple. They really like the products, not merely for its technical capabilities but also for its brand and to express to the rest of the world that they are an Apple user, and they enjoy engaging with the company and promote the products and the company to others.

If you look into the marketing processes, you will see that there is much overlap with IT management processes. The overarching marketing process as defined by Armstrong and Kotler is as follows:



I will briefly go through each process and how this can be applied to IT management.

Understanding the marketplace and customer needs and wants
The first step is to understand the customer needs and wants. And here it already gets difficult. Sure, we can go around the organisation and identify what they would need or want. The problem becomes more difficult with the fact that you can’t give each user or each department exactly what they want. From the top you will have been given directions to reduce or at least control cost. Besides this, each department and user will look at their individual needs and will not look at the overarching organisational requirement. You would want to avoid a hotchpotch of technologies to be managed. The C-level managers will have different requirements and objectives than the individual users of the systems. The discrepancy is quite often not one that is part of IT but is present within the business. The question is then what you can or should do about that as a CIO, IT manager or IT department.

Life is always easier if you have a single business owner for a specific system – for a specific need. It becomes more difficult if you can’t really identify a single business owner, for example as you have with a CRM system or the more abstract need of something like “security”.

Sometimes the needs and wants seem to be irrational. When the iPhones first came on the market, the CEO was the first to demand an iPhone. But the IT department had issues with iPhones to be connected to the network and in the end it is also the CEO who is responsible to assure that security of critical data of the company and the continuity of the business is warranted. The trick is to find the logic behind the requirement and to find the right balance in the service to be provided. And part of this service is assessing the risk and informing the CEO of the associated risks.

But in general, there is much similarity between marketing and IT with respect to this first step. IT has various processes in place to understand the needs and wants of the customer and the level to which this happens will vary per organisation. For example, when we commence a project, we will come with a vision document and perform a business requirements analysis. But outside the initiated projects, are we always proactively researching the business needs or do we wait until the business comes to us with a request?

One aspect of this is also “understanding the marketplace”. Sometimes the IT department gets caught out with new developments in the marketplace while the customer has already picked up on it and is ready to use it while the IT department is not ready for it yet. It happened when the Internet emerged and now with social media we see a similar thing. We see more and more that the business is bypassing the internal IT department and shops for IT services themselves. The question is then whether this is a bad thing or not. And this comes than down to what the role is of the IT department is. In marketing terms: “what product do you provide and which customers do you serve”?

Marketers spend quite some time to understand customer buying behaviour and dive into the psychology of their target market. They have models for consumers and for business customers. Maybe we should research better what makes our internal customers tick so we understand their drivers better.

Design a customer driven marketing strategy
This is the process that should give the answers to many questions. The marketer asks himself for this the following two questions which is all about market segmentation, targeting, differentiation and positioning:
1. What customers will we serve?
2. How can we serve these customers best?

At first sight, you might think that the first question does not really apply for the IT department. But you should put that in the context of specific systems and services you might provide.
For example, a clinical research department might need some specialised equipment that also comes with relevant specialised computer systems. In many cases the vendor will provide a complete set of managed services for the equipment and computer systems. There is not much use for the IT department to get too deeply involved in this. If these systems are rather isolated, you see in reality that the respective business unit will maintain the relationship with the vendor and IT only needs to provide some infrastructure services.

Another example could be payroll. A payroll system and its support are in many cases outsourced and in many cases also a big part of the business process is outsourced while this is all managed by the HR or Finance department.

With the emergency of more and more business systems being offered as Software as a Service (SaaS) in the Cloud, we see that there are more and more situations where the business can organise their own IT needs via vendors without too much involvement of the internal IT department. So as an internal IT department you definitely have choices of services you will provide and to which customers in the organisation. And with the emergence of the Cloud, the IT department will have to rethink its strategy. What role do you play?

Though I don’t see any issues with the business units engaging Cloud providers themselves for those utility solutions that really can be obtained “off-the-shelf”, the risk is that over time the organisation will have a hotchpotch of various cloud solutions and that information will not flow between the systems. As a consequence, data needs to be manually re-entered in the various systems with the risk of all the errors that we have known for so many years. The IT department has for this a marketing opportunity to provide consultancy and integration services.

In many cases, the IT department will have systems in place that everyone in the organisation must use. The customer is given a choice for one product only. In marketing terms, the IT department uses a “selling concept”. You have a product and now you are trying to convince the customer to use this one product. Marketers in contrast prefer to use the “marketing concept”, which means you look at the needs and wants of the customer and adjust your offering accordingly.

This is not always easy. To keep costs low, you like to standardise. For example, your email client will preferably be standardised across the organisation. The same applies for your CRM system. You might have invested already in an enterprise license of a certain product which means you can service other business units cost effectively. Leaving the option open can be risky in the sense that you will need to promote the benefits of your offering which can be lower costs and better data integration. Selling lower costs of course only works if the respective manager actually will notice this on his budget.

But giving the people the option will change the way they perceive the value of the option you provide even though you will run into cases where a different choice is made and your warnings of higher costs and other draw-backs are ignored.

It all comes down to choose your value proposition: What is the role of the IT department in the organisation which results in the many discussions around the (changing) role of the CIO. Are you an enabler of technology or are you the strategic partner? And this role could vary for the different customers you have and it can vary per customer over time.

Construct an integrated marketing program that delivers superior value
A marketing program is about the well-known 4 P’s Product, Price, Place and Promotion and the additional 3 P’s People, Process and Physical Evidence. This is pretty much everything that IT processes revolve around. Product and price are obvious items. Place is also extensively discussed. Outsourcing, off-shoring and also the Cloud relating to the physical location of your systems are items that are always intensively being reviewed. We also known that people and processes can make or break your customer experience and the value you provide. I found it always invaluable to have support staff and service delivery managers on the floor with the customer. The direct face to face interaction and the ability to sit down together behind a monitor cannot easily be replaced by over the phone or email interaction.

Many IT departments work on promoting themselves, but for many others it is an opportunity for improvement. A big part of this will need to start with internal marketing such that IT staff can be promoters of the total offering of the services that are provided. IT staff need to think customer first and that might require some changes to the way the team has been set up. A condition for transforming staff to successful promoters of the products and services is that they need to enjoy working in the team and for the company.

Another consideration is branding. Our outside world competitors and partners have a clear brand. But should we develop a brand as well? The definition of "brand" that I think best suits is "a recognisable and trustworthy badge of origin and also a promise of performance". (From: Feldwick, P (1991), "Defining a Brand," in Understanding Brands, D Cowley, Ed. London:
Kogan Page.) Defining a brand for your IT department, or if you have a large IT department multiple brands, could assist with better positioning your role and services within the organisation.

Physical evidence is an interesting item to consider since much of what IT does is a service. A project can deliver a new system and at times you deliver new hardware. But once systems are in place, your primary product is a service. Strategic advice is also a service. We struggle regularly to quantify the value of IT and we try to make this visible through reports and numbers such as "cost savings" or "reduction in number of service calls".

Build profitable relationships and create customer delight
Profitable in monetary sense is not directly an objective of the IT department. However, if you have a charge back model and your customer is happy to come to you and spend his budget with you, you can consider this profitable. But profits can also be measured in terms of respect and positive evaluation of your services or in clear results of business improvement.

One thing is to put technology in place for the customer. Another thing is the customer to be delighted about it. First of all it means that the technology itself must meet or exceed expectations but secondly it means that the ongoing experience must create this delight. And this is achieved by creating excellent customer support services and relating more deeply and interactively with the customer. Many organisations will have business relationship managers or service delivery managers to maintain this ongoing customer relationship. Their role is to assure that the customers achieve most out of the systems and also identify new needs and wants that you can respond to.
The delivery of the services is something that goes across the whole IT department. Though you will have a designated service desk (helpdesk), we tend to say that everyone in IT is part of the service desk.

At some moment in time, you can assist your business customer strategically and jointly work on business improvements and put a strategic technology solution in place. Over time this solution is just there, it simply works and just requires support. It has become a utility. What initially delighted your customer later became a basic expectation. The Kano model explains how this works.

It means that at one moment in time you can be a strategic partner for a customer while later you have become an enabler. And you will need to adjust your product and service level to the expectations and the needs of the customer. As Lou Ehrlich says in his article, if you ask your stakeholder what's on their mind and they respond with issues around their PC or mobile device, they are probably not ready for you to act as strategic partner.

The concept applies to all features of your products and services. For features of business systems, of your infrastructure such as speed of the network and storage capacity and for features of your services such as speed of addressing service desk calls and internal consultancy services. In order to excite the customer you will have to improve on your features which subsequently will become basic expectations.

One thing that we should not forget is that in order to excite the customer, at least all the basic features must be provided. You can try to be a strategic partner as much as you like, if your systems are not reliable, the customer won't be excited.


Capture value from customers to create profits and customer equity
The end result of your marketing process is to have obtained the respect and positive evaluation of your customer and with the challenge of meeting both the needs of the individual users and the C-level managers. Marketing concepts will not give an answer to all challenges that the CIO or the IT department face. The IT department has a governance role and this can stand square with with a service provider - client approach. But I believe that by looking at your services from slightly different angle can improve the value that you can create for the organisation and the way your customers value your achievements. Customer equity means that customers are loyal, achieve the maximum out of the technology that is provided and will call upon your services effectively that optimally benefits the organisation as a whole.

1 comment:

  1. this is a cracker ..i love the title 'bulild profitable relationships and create customer delight' ...sugary goodness!

    ReplyDelete

You are welcome to leave any response or thoughts that you have as feedback.