The Seven Core Principles of Digital Transformation

Digital Transformation

Digital Transformation has become a hot buzzword recently, being adopted by Microsoft as the overarching theme for their cloud based business apps and the subject of many studies from McKinsey and company, Gartner and other research firms.

I wanted to share some of our approach and lessons learned working with companies in different industries such as Insurance and Manufacturing on their digital transformation initiatives.

A transformation does not happen overnight. It is a long and sometimes painful process that to be honest, never really ends. The rate of innovation and change is increasing and new business and customer needs will constantly emerge.

Therefore, our approach is very much grounded in the concepts of agility. The right foundation built with change in mind. In such an approach, it is not always beneficial to try and document every future requirement to see how to accommodate it but to have a very strong foundation and an agile, open framework that can be easily adapted.

A good way to judge your current agility level is to perform a Digital Agility Gap test. For small, medium size and large changes business has requested in the last year, what is the gap between when the business would like to see the change made to when your organization was able to deploy? The larger the gap, the more acute the need is for a comprehensive digital transformation.

agility-gap

The following 7 core principles should drive every digital transformation initiative, large or small:

  • Business Driven. This may sound obvious but all digital initiatives need to have a business reasoning and business sponsor. Technology can be a game changer but very often, the digital channel needs to be part of an omni-channel approach. eCommerce can augment retails stores or distribution channels but will not replace them for a long while. Digital must be part of the overall business and market strategy. The new role of Chief Digital Officer is a great example for how organizations integrate the digital as a business channel with broad responsibilities and a chair at the executive table. The Digital aspect needs to be part of every major organizational strategy, not a separate one. For example: you are launching a new product, how will you design it, support the manufacturing/supply chain, market, sale and support the product using Digital means?
  • Data is King. Having enterprise information available in digital format with a single source for the truth is the absolute foundation of a digital transformation. Without “Good data” the effect of garbage in, garbage out will produce inconsistent results and systems people can’t trust. This is usually the hardest part for many companies as organizational data may be residing in many legacy systems and too intimately tied to old business applications. It also is hard work. Hard to understand and hard to put a direct ROI on. It is not glamorous and will not be visible to most people. In lieu of complete data re-architecture, most organizations start with master data management and data warehouse / operational datamarts to get around the limitations of the various systems where data is actually stored. The imperative is to know what the single source of the truth is and abstract the details through data access layer and services. The emerging area of Big Data allows capturing and processing ever larger amounts of data, especially related to customer interactions. Data flows, validation and storage needs to be looked at again with new vision into what and how data is captured, stored, processed and managed.
  • Actionable Analytics. Many organizations invested heavily in Business Intelligence and use decision support systems to run analysis and produce reports. The expanding scope of data capture and processing now allows analytics to serve as actionable triggers for real time decisions and other systems. For example, your website’s ability to make customer specific product recommendation can be a result of real time process that conducts a customer analysis and what similar customers have bought and can execute an RFM analysis to assign a tier to the customer and derive relevant offers. Marketing campaigns can target prospects based on predictive analytics etc. Closed loop analysis is critical for understanding the impact of decisions or campaigns. The ability to see the connection between an offer or search campaign and the revenue it generated is the foundation of future investment decisions.
  • Customer Centricity. One of the main drivers and benefits of the digital transformation is the ability to meet the new world of customer expectations and needs. Customers want access to information and ability to take action and interact anytime, anyplace, from any device. The new Digital Experience maps to the customer lifecycle, journey or buying flow and data is collected at every point of interaction to feed personalization, targeting and marketing. When done correctly, an intelligent user experience will improve engagement, loyalty and conversion. In designing new digital user experience, we usually recommend mapping the user interactions across all touch points and focusing on finding common needs rather than a “Persona” driven approach. Those in our experience are too generic and lead to oversimplification of the model.
  • Agility in Technology and Process. Agility is at the heart of our approach and without it you would go through a transformation every few years. It is broader than just IT and impacts many business and operational processes. Few key concepts of planning for agility:
    • De-coupling. A large part of what makes changes hard, is the intertwined nature of most IT environments. Proprietary databases, older applications without outside interfaces, hard coded database calls in code, heavily customized but dated applications, etc. The solution is to de-couple the elements and create a modular, service oriented architecture. Data should be separated from logic, services, and user interaction allowing each tier to grow and evolve without requiring complete system re-write. For example, the biggest driver of transformation in the last few years has been the user experience and the need to support users in various mobile devices. A de-coupled architecture would allow UX overhaul using the same services and backend.
    • Agile / Rapid application development. Application development needs to be able to create prototypes and test ideas on a regular basis. For that to happen, the process of definition, design, implementation and testing software has to be more responsive to business needs. Whether following Agile Methodology principles or just a more iterative version of traditional models, application development has to be able to quickly show business users what they would get, and adopt a minimal viable product approach to releasing software. An emerging model of continuous delivery allows faster, automated deployment of software when it is ready.
    • Cloud and Infrastructure agility. The emergence of cloud services is making agile environments so much easier to implement. From an infrastructure perspective, you no longer need to invest in hardware resources for your worst-case load scenario. The ability to get just as much computing resources as needed on demand and scale as needed in matter of minutes makes platforms like AWS and Azure very appealing. Many applications now offer only cloud based versions and even the large players like Microsoft and Oracle are now pressuring all customers to get on the cloud versions of their applications. The ability easily to plug a cloud application into the environment is the ideal of agility. With a common security and authentication layer, the modern corporate application landscape is comprised of many different cloud applications being available to each user based on their role and integrated to a degree that makes the user experience as seamless as possible.
    • In addition to the environment, software and infrastructure, organizational processes have to be more flexible too. Change management needs to become a process that enables change, not one the stops it.
  • Process Automation: with the new landscape comprised of so many different and independent application, process automation and leverages the open interfaces of application is becoming critical. Traditional Business Process Management application are now morphing into cloud orchestration and an ability to allow processes to be created across multiple applications and managed / updated by business users without IT involvement.
  • Security. Last but not least, the open, flexible nature of the future landscape we were describing here, requires new levels of security that should be an integral part of all facets of the environment. Data security and encryption. Services security, security in application design, all layers and components have to consider the rising threat of hacking, stealing data and denial of service that are more prevalent than ever. We see this as the primary concern for companies looking to adopt a more digital and agile environment and a large emphasis on risk management, security standards and audits should be a primary component of any digital transformation initiative.

Thoughts on the Future of SharePoint

In a recent event, Microsoft outlined their plans for the future of SharePoint, mostly as part of the office 365 family. It was exciting to see SharePoint coming back to the forefront. After a few years in which Microsoft plans for the product were not very clear (No on-prem future. Oh, sorry, Yes on-prem future but with Hybrid focus. Let’s call it Sites, let’s stop supporting external sites, etc.) the fog is starting to clear.

SharePoint is now being smartly positioned as the place where your office 365 experience should start. It was long positioned as such for company Intranets and users default homepage. It is a portal platform after all. It has a new responsive look and the content highlights sites you’ve recently visited or interacted with, benefits of the office Graph.

SharePoint16NewHomePage

Speaking of the Office Graph, love it or hate being tracked, it is the foundation over which all new office 365 applications are built and new API’s will allow developers to take advantage of it in building applications and should extend in the future into Dynamics 365 as well.

The new homepage is also responsive and using a new overall look and an underlying technology called the SharePoint framework. I’ll touch on all these later but let me just say it about time. Nothing made SharePoint look older and out of pace than the clunky experience on mobile. Now all spiffed up, it will offer a modern and mobile first approach throughout.

The full 2 hour presentation + demos

New Features to get excited about:

As I’ve said, it looks like all of a sudden, the flood gates are opening and after a relatively long time of minor updates, we are to expect a deluge of new things in the next few months. Here are the ones we are eagerly awaiting:

First class mobile experience + apps: some of it, like the new SharePoint homepage and iOS app, are already available. Apps for Android and Windows Mobile are coming soon.

SharePointMobileApp

As part of the new mobile first user experience overhaul, a more modern and responsive look is coming to SharePoint sites, list and libraries

Teamsite

To enable these new interfaces (which until not, required using an external JS framework like Bootstrap) Microsoft is introducing a new SharePoint framework. Built in JS and HTML5, it will support responsive design and allow for the creation of richer user experience and apps that run in the browser. Details are yet to be full released but expect it to be the MS version of the popular Angular.JS framework.

SPFramework

Office 365 Groups will be extended into SharePoint. It has long been a source of confusion as to the different types of groups and where they appear. Microsoft is working to extend the office 365 groups into Yammer and now into SharePoint, so that an office 365 group will have a team site and vice versa. IMO, it is a much better solution for storing files and collaboration than doing it though OneDrive as it is currently done. For more on groups: https://sway.com/G_yV0w-GadIB1aA2

Intelligence and analytics. A new analytics dashboard is available in central admin with much broader and visually appealing interface. Now if only this can be available to every site owner..

SPnewanalytics

https://blogs.office.com/2016/03/15/new-reporting-portal-in-the-office-365-admin-center/

Feature-packs: for on-prem customers, Microsoft will be issuing regular feature packs that will add functionality previously released for office 365.

One more thing we are excited about is the upcoming release of Dynamics 365 and the promised common data model and services across all 365 environments. That will allow new levels of integration and automation of processes across the o365 platform from end to end.

Can’t wait!

What’s new in SharePoint 2016

SharePoint 2016 is finally here and we wanted to share some of the highlights. There are a few major improvements over SharePoint 2013, and some caveats to watch out for.

General Direction:

Microsoft has good reason to want everyone to get on the Office365 cloud bandwagon:

  • No more upgrade cycle
  • Ongoing fixes and improvements
  • Integration with other Microsoft tools
  • And of course, per user monthly subscription revenue

In reality, we see two hurdles for a large number of companies waiting to get onto the cloud version – the ability to control your environment, and having your data  at someone else’s mercy – not everyone is comfortable with either of these.

SharePoint 2016 is aimed at exactly this audience and provides 3 major areas of improvement:

  1. Catch-up with many platform improvements released to the cloud in the last 3 years
  2. Improvements in hybrid environment support, allowing companies that have some cloud footprint and legacy on-prem farm a way to provide a more seamless user experience
  3. Mobile friendly user interface
  4. Improved encryption standards

The full list of new features from Microsoft

Key features worth highlighting:

Hybrid environment support:

hybrid

While the Hybrid option does officially exist in SP2013 it has quite a few limitations that made it difficult to use. SharePoint 2016 adds the ability to follow SharePoint Server and SharePoint Online sites, and see them consolidated in a single list. Users will now have a single profile in Office 365, where all of their profile information is stored (although it is not a 2 way sync).

Most importantly, search can now include both on-prem and Office 365 sites.

Microsoft’s view is still assuming Office 365 is your primary environment and the on-prem is legacy that has to be supported for now, but these new features make a hybrid solution much better for users.

Mobile user interface:

mobile

A new and improved mobile interface is a very welcome upgrade. While it is not a completely responsive experience, the OOTB use is much better and can be more easily customized using Bootstrap to be responsive.

Improved Security

SharePoint 2016 now supports TLS 1.2 by default. SP13 required TLS1.0 to work properly and we have many customers who wanted to turn that off but could not. https://technet.microsoft.com/en-us/library/mt346121(v=office.16).aspx#encrypted

 Deprecated features

A few important notes about deprecated features:

  • There is no longer a free version. The WSS/Foundation free version has been around for a very long time and enabled small companies or teams to use SharePoint for free. There will not be an equivalent for SP16 so companies that currently use SP Foundation will need to migrate either to a Standard version of SP16 or to office 365.
  • Some 3rd party integrations will no longer be available. The SAP module (Duet) will not be supported. SalesForce also has shared with us that they have no intention of upgrading their SP2013 integration. They clearly see the direction Microsoft is taking in moving everyone to the cloud and do not see a future in supporting future on-prem installs.
  • Excel services will require an online office server in order to work.
  • Lastly, the seldom used Notes and Tags are formally gone.

Final thoughts

Microsoft is very clear about SP16 being a transitional product in the path towards cloud. It will support customers who are not yet ready to make the leap but will emphasize the hybrid options. More and more capabilities will start to depend on the cloud (like Excel services) and 3rd parties will stop supporting the on-prem installation. The future is clearly in the cloud so if you are on an older on-prem version and thinking about an upgrade, check the cloud version first and only if it is not a viable option for your organization consider the on-prem/hybrid options.

Google search

Google to penalize non mobile sites

Google has just announced that starting April 21st, websites that are not mobile friendly will be penalized in mobile search results. Seems like a no-brainer, if you are using your phone to do a search, it is easier to view information and take action if the site you go to is mobile friendly.

With more than 25% of searches now being done on mobile devices (BIA/Kelsey (April 2014)), companies that have not yet created a mobile or responsive site can expect a traffic hit in the next few months.

In addition to better search placement, mobile, responsive and adaptive sites also lead to higher call percentage and from several implementations we’ve seen, a huge improvement in abandonment rates. It seems users on mobile devices that get to a site that is not mobile friendly would just rather go somewhere else.

In the blog post, Google also provides some guidelines and testing tools to check your site compliance.

Tip: not highly publicized, but Chrome browser includes a great mobile testing tool. In the Menu under “More Tools” there is an option for Developer Tools. These allow for selection of device for output and changing the HTTP header data to test using different devices.

5 Highlights from SharePoint Conference 2014

SharePoint Conference 2014 wrapped up last week. Microsoft used the big stage to announce some exciting new capabilities and paint a clear picture as to how they see the future of SharePoint.

It starts with their view of the future of work. Not farm labor but information work of course. That future is networked. It consists of individuals and groups collaborating using documents, discussions, chat and video in a fluid setting. People may be working from their office, home, on the road or all of the above and using a variety of devices. They need access and an ability to interact. They need to be productive.

I have to subscribe to this vision as this is exactly how we work at Edgewater today. The future is here.

Microsoft’s vision for the technology that should empower this future of work is a natural extension of their mission of supporting information workers, and with Office 365 it all comes together rather nicely. Your office apps and files, email, chat, video, meetings, groups, calendars, people, social interactions all available and integrated. Available from anywhere and on any device.

It’s not all there yet and as I mentioned in an earlier post, there are quite a few gaps to fill but they are rapidly working on closing it and the speed of cloud deployments will allow them to make it a reality pretty quickly. Unless they find a way to derail things again.

A few things that were introduced this week build on and extend these concepts.

officegraphThe Office Graph: Not a new concept in social networks and a core capability of Yammer, extended to the full Office 365 suite, this is at once exciting and scary. All my activities, connections, interactions are tracked and put into a graph format that allows applications to use this data for a more relevant and personalized experience. It has some great potential applications, some we’ll talk about next with the Oslo interface. On the other hand, not that there is any real privacy in the workplace but any semblance of it will be officially gone. “Did you read my memo from last week”? well, no more white lies as your manager can easily get a report of who exactly read the memo.

OsloOslo: a new tool / interface concept from the FAST search team combines search and the social graph to give you a FlipBoard like experience, bubbling up things you should know. If your close colleagues are all reading the same document, maybe you should too? If a specific blog post is generating a lot of comments, what discussions are very active? Natural language search across multiple data sources. Can definitely be very useful.

GroupsGroups: yes, interesting to think of groups as a new concept. In this incarnation (lovers of public folders rejoice) groups are a cross application construct for discussions. Integrated across Yammer, SharePoint, Outlook and office, the idea is that in many instances, group discussions are a better way to interact than email. The only concern I would have is the proliferation of groups. It may be good for people who are only part of a handful of groups and teams but many of us are part of dozens if not more groups and teams and the interface I’ve seen only included about 6. I hope it scales.

inlinesocialInline social experiences: in short, this recreates a way to have a Yammer conversation on files and other Office, SharePoint and even Dynamics entities. I love this feature. It is such a natural way to interact instead of emailing and allows all people with access to see the discussion.

Cloud Only? Finally, I think the big question on everyone’s mind was what will happen to the on-premise version of SharePoint. With so much focus on the integrative aspect of Office 365 and rolling new features on a weekly basis, will the local server be phased out? The official answer is that the on prem version will continue to be important and get a new version in 2015 and beyond. With such a huge existing installed base they have to. But the future is clear and it is definitely in the cloud.

Happy Birthday Office 365, what’s next?

It sure looks like it’s been around for a lot longer, but office 365 is officially celebrating its 1 year anniversary this week.

It’s true that some aspects of earlier MS cloud effort have been around for 4-5 years under different names like BPOS but the new branding and consumer side were introduced last year and SharePoint online took a huge step forward. So how is it doing?

Not bad according to different reports. 3.5 million Consumers have signed up and 15% of exchange users are in the cloud (6% increase over the last year). Microsoft is clearly betting the farm on cloud and the recent choice of its cloud chief Nadella to be the next CEO is a telling sign.

A recent technical summary at ZDNet and a financial analysis at Seeking Alpha both look very positively on the stability and profitability of this model.

We’ve been using the Microsoft office 365 email for a number of years and SharePoint for the last few months and our experience has been very positive. Our customers have been reporting similar satisfaction levels with the reliability and performance. The main advantages we see are:

  • Reduced IT costs: No need to allocate server or VM’s. No need for redundancy and backups. No need for regular installation of patches and updates and all the testing involved.
  • We invested in putting provisioning processes in place that dramatically reduced the timeframe for creating new sites and reduced administrative effort.
  • Mobile and iPad access through Office Web Apps.
  • Social: the new newsfeed, Yammer integration and Communities bring out of the box enhanced collaboration and social interaction.

Looking ahead, there are definitely some concerns and wish list items I’d like to see Microsoft address for office 365 and SharePoint online:

  • Stronger security and privacy commitments. Not that the NSA would have a problem getting to most information anyway but knowing that all corporate secrets are basically available to them upon request is disquieting. Multinationals may not be willing or legally able to make the jump and trust Microsoft with their data. This can be the biggest obstacle for mass adoption for larger companies. Small to midsize companies may care less.
  • More control. From an IT point of view this is scary. An inhouse server you can test, tweak, add memory to, reboot when needed, and install 3rd party add-ons. You now, control. Giving away the ability to jump in and intervene is hard. Even when Microsoft does deliver reliability and reasonable performance our natural impulse is to try and make it better, tweak, optimize. Not much you can do here. I do hope that Microsoft expands the controls given to customers. It will get a lot of untrusting IT guys a level of comfort that is not there now.
  • Support for Web Content Management. If we are giving up a local SharePoint environment, why force users to have one if they want to take full advantage of SharePoint as a content management tool for public website?
  • Add native migration tools. Not that I have anything against our partners the migration tool makers but releasing a platform with no out of the box method of upgrading to it was very odd and the fact no support has been offered since is disappointing. Makes the natural audience of smaller to mid-size businesses with an additional expense to migrate.
  • Cleaner social toolset. I wrote about it earlier in the year, that the Yammer acquisition created some confusion among users. The promised SSO is still outstanding and the small incremental steps like the one released this week are a little confusing.

The Consumerization of Health Insurance: Adapting to Private Exchanges

findcustomersThe new Affordable Care Act (ACA or ObamaCare) is introducing new opportunities and challenges for health insurance companies. The complex set of regulation, exchanges and integrations needed is still a political and technical mess but one thing is clear: health insurance companies will have to embrace their consumers.

It’s no secret that currently most health insurance companies’ customers who make buying decisions are not the actual consumers but employers or benefit brokers. This is about to change.

The process started even before the latest reforms and is modeled to a large part after the successful pension / retirement benefits model where companies moved from a company provided pension into a marketplace. The employer is putting in a defined contribution, and the employee is choosing investment vehicles from various providers.

The model works very similarly for health benefits with private exchanges giving employees more choices. Walgreen has recently moved its 160,000 employees to a private exchange and estimates are that by 2017, 18% of the American public will buy their insurance at private exchanges.

So what do health insurers need to do to better compete in an open marketplace? Mostly, steal the best practices established by other competitive markets such as the aforementioned retirement benefits and P&C insurance providers:

  1. Enable consumers to make an informed buying decision. While prices and coverage may be negotiated with employers, additional tools and content written for consumers is essential. For example, a “find a doctor” tool that lets you see if your physician is part of the plan, and detailed coverage comparison between plans.
  2. Give consumers full access to their information and personalize the experience. Web portals, mobile applications, email and text messages all tailored to consumer preferences and health interests. The self-service aspect will both give consumers control and save call center costs.
  3. Know your customers. Since until now most group members were not customers, the interaction was very transactional and focused on claims. A huge part of the consumerization of healthcare and of health insurance is starting to use ecommerce style tools – CRM systems that help track and manage all interactions; improving data collection, tracking and analytics to help segment and personalize user experience and wellness communications and offerings.
  4. Establish a clear measurement and analytics framework. New measures and metrics need to be put in place to judge the effects of this transition on the business and the determine best ways to react. The new measurement framework has to look at metrics such as:
    • Customer acquisition cost
    • Customer retention rates 
    • Customer profitability by source and segment
    • Customer lifetime value
    • Impact of wellness activities and user engagement with them on costs
    • Impact of self-service portal and mobile applications on call center volume and costs.
  5. Adapt and optimize marketing. The direct approach requires multichannel direct marketing.  Analytics can help guide the best mix of marketing options to achieve the different acquisition and retention costs.

A lot of people question whether going after the direct channel is even worth it. Some have had bad experiences in the past with individual members that tended to consume more healthcare since they were not always in a good enough health to hold a full time job.

The transition we are seeing to private exchanges and defined contributions seems much more substantial and can dominate the market in 5-10 years. A good toolset, marketing approach and measurement framework will be invaluable to compete for the right segment.

Yammer or SharePoint 2013 for the Social Enterprise?

In buying Yammer last year, Microsoft pretty much acknowledged that it dropped the ball on social and needed to bring in external reinforcements. Acquiring Yammer also fits well with the new cloud services approach of office 365. The vision according to Microsoft is cloud first. They love the ability to roll out changes and fixes on a faster pace, but mostly, they love the business model.

At the same time SharePoint 2013 includes a much improved set of tools for social collaboration including a brand new activity stream app. So what should you use? Yammer or SharePoint 2013 built in social tools?

Here is the timeline and guidance as provided by Microsoft:

If you are a SharePoint cloud user – go with Yammer. There is a basic integration available now with the promise of single signon in the fall. They also promise updates every 90 days.

If you are an on-premise user (and most companies are since SharePoint 2010 online was not very good..) and moving to SharePoint 2013, the decision is a bit more complicated.

Yammer offers an existing app for SharePoint 2010 that can be integrated in if you are a paying Yammer customer, but nothing yet announced for SharePoint 2013.

So the only option really is to deploy the SharePoint social services unless you are already using Yammer Enterprise and can wait if/until they support 2013.

The longer term roadmap beyond 2014 is cloudy as well. Yammer is a cloud offering and will clearly be tightly integrated into office 365 but as much as Microsoft would like to, not everyone will get on their cloud platform that quickly. In all likelihood, Microsoft will continue to support and even release new version of SharePoint on premise but certain aspects will likely not be improved much and Social seems one of them. Yammer will become a selling point and an incentive to go cloud.

Another interesting point is how will this work for Hybrid Deployments and how migration to the cloud will handle the social data or be able to migrate it into Yammer. We’ll have to wait and see..

For more details see the official blog post from Microsoft and an interesting post on ZDNET on how Microsoft approached social for their internal Intranet, apparently using both models and giving users the choice when creating a collaboration site based on their primary need – document based (SharePoint) or activity stream (Yammer). Now, if only one site could do both..

From Web Analytics to Customer Intelligence

CIWe recently were invited to present internally at a prominent health care payer network about the rapidly changin role and importance of web analytics. Gone are the good old days when it was enough to just run a log analyzer or put a simple tag to collect all the information needed about the interactions a customer has with you. Analysis used to be limited in scope and focus on a handful of parameters that could be optimized, such as bounce rates and conversion rates, by tweaking the checkout flows and usability improvements.

Not that conversion rate optimization is less important today but as customer interactions focus less and less on just the company website, the new critical need is to try and get a coherent picture of general customer behavior across all touch points. Instead of trying to infer customer thoughts and concerns through their clickstreams, many are now openly expressing needs and problems through social media.

This goes beyond “cross channel marketing” into the new area Forrester and others are now calling Customer Intelligence (CI). Similar to the way business data evolved from simple reporting into Business Intelligence (BI), as customer data gets more complex and varied, putting everything together and drawing conclusions and trends from it will need to employ similar methods and tools.

This is primarily a mindset change from the somewhat passive “analytics” to the broader and much more active role of managing and providing customer intelligence.

The expectations from Web Analytics professionals and systems are changing as well from the cyclical analysis and response to the providing of on demand, immediate intelligence for both individual and aggregate customer needs and problems. In some companies this evolved into a real “command center” that has 24/7 monitoring and interaction tools to listen, interact and respond to customer needs.

There are a few challenges that mark this transition:

  • Quantity: The quantity of interaction points is exploding due to social media, online videos and mobile devices.
  • Traceability: It is very hard to identify users across various media. Mapping a web user to a Facebook account or twitter feed is not always possible.
  • Immediacy: There is an overwhelming need and expectation for immediate response.

Here is a conceptual diagram of this new reality illustrating all the new interaction points being consolidated into the central Customer Intelligence and the introduction of the analytical services that can be used to optimize the user experience.

These analytical services can work on both an individual and aggregate level:

  • Individual: If we can aggregate customer data and interactions from different channels, this will dramatically improve segmentation, insight for sales and customer service professionals interacting with the customer, and services that can target offers or content in real time based on user past interest and behavior.
  • Collective intelligence: By looking at customer activity across all channels we can:
    • Optimize targeting through the different channels and our investment in them
    • Improve recommendations
    • Identify trends
    • Identify problems / issues / sentiment changes and address them quickly.

To start implementing Customer Intelligence, the process is now becoming quite similar to implementing a BI solution

  • Expand use of social listening and data capturing tools and store their data
  • Adjust data models to accommodate multiple user identifiers, channels, devices etc.
  • Redefine KPI’s
  • Define and implement analytical services
  • Adjust reporting and analytics
    • Real time
    • Dashboard level

The Web Analytics vendors are starting to step up and offer tools and support for Customer Intelligence. In upcoming posts we’ll look into WebTrends, Omniture, Google and IBM to see how their offerings stack up and the type of solutions they support.

Are eCommerce prices getting too dynamic?

This holiday season I was looking for a specific toy as a gift. I did a price comparison and found it had the lowest price at the Toys R’ Us site. When I went back to make the purchase just 2 hours later, the price has jumped up by 50%. Now I had to do my comparison all over again. That was frustrating to say the least.

This is the latest example of Dynamic Pricing. It’s been around for a while but mostly in scarcity driven industries like airlines and hospitality / entertainment. Here the rules of the game are clear, inventory is limited, it has an expiration date, securing a sale in advance has benefits and discounters can help you sell last minute excess inventory.

Now back to our dynamic pricing for $50 toys, other than a few highly desirable toys before Christmas, this is not a scarcity market. Special sale, timed sales, loyalty coupons and all these dynamic promotions are confusing enough but serve a purpose. Not being able to do a simple price comparison and place an order is annoying and will impact the buying decision. If there is always the possibility of a lower price just around the corner, then let’s wait.

Target had recently announced that it will begin price matching for all products, even against amazon but details on implementation are a bit fuzzy.

As dynamic pricing gets more widely used and noticed by consumers, how will they react?

Here are a few suggestions for retailers considering or implementing dynamic pricing strategies:

  • If the products you sell are of a limited quantity, knowing how many are there (at this price) is very helpful. What Orbitz does for example (only 3 tickets left at this price!) gives the consumer valuable information and an incentive to act fast.
  • If a price is reduced for a period of time, let the consumer know for how long it will stay at this price. Again, enables decision making.
  • Shop with confidence. While guarantees against future discounts are problematic, consider offering this to members of your loyalty club. The same way a great sales associate will tell you a sale is starting next week and he will hold the items for you so you can pick them up at the lower price, rewarding the best customers with price assurance and advance knowledge of sales will go a long way.
  • If you are putting an item below the competition, make it known. Consumers may doubt it but if they check and found it is true it will build trust.
  • Try not to put items that are dynamically priced into an email. Since you have no control over when the consumer will read the email, they may be viewing pricing that are no longer correct.
  • Feed the aggregators and comparison sites as soon as changes are made.

The key theme here is that dynamic pricing can be great if the buyers are given enough confidence and information to make decisions. Otherwise it may just make the the consumer even more hesitant to click the “Buy” button.