CIOs and CMOs Partner To Become Co-Designers of the Customer Experience

Expert Interview: Jon Iwata, with the Center for CIO Leadership

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Mr. Jon Iwata

Jon Iwata is IBM’s Senior Vice President, Marketing and Communications. He spoke to the Center for CIO Leadership about why close collaboration between Chief Information Officers and Chief Marketing Officers gives the best companies an edge in the marketplace.

Center for CIO Leadership: Our CIO members tell us they are facing an explosion of data from an increasing number of sources, including Social Media, and sometimes struggle to make sense of it all. How does the availability of so much data impact the marketing arena?

Jon Iwata: Essentially, we have discovered an extremely valuable natural resource — data. Marketers today recognize this. More than 1,700 CMOs interviewed by IBM said that the top three forces changing marketing are, in order of importance, the data explosion, the rise of social media, and new choices of channels and devices.

For marketers, the so-called “Big Data” phenomenon holds tremendous promise. Using analytics to extract insights from all the data, we can better understand our customers. We can market to individuals instead of to segments. We can use real-time information to predict what they’ll do or buy next. Forward-looking CMOs are beginning to move in this direction. They are changing the practice of marketing.

However, the CMOs we surveyed also said they are least prepared for these shifts. They lack the capabilities, skills and tools required to address them. As CMO of IBM, I can relate. I see the same challenges.

Center for CIO Leadership: What is driving the move toward predictive analysis of data?

Jon Iwata: Traditionally, marketers have made decisions based on historic data – what was sold, what market research told us, how campaigns performed. Today we have the tools to take advantage of real-time data – what is selling right now, how campaigns are performing right now. I would say that for most CMOs, this is where we are – somewhere between using backward-looking data and real-time data. But as we get our arms around all the data available to us – data in our enterprise systems and the vast, unstructured data outside the enterprise – we can apply analytic tools to predict customer needs and wants. You hear about this when marketers talk about “next best action” and “next best offer” and “buyer propensity” models. We are excited about this capability because it will deliver great ROI on marketing investments. And, from the perspective of the customer, we will be much more relevant and personalized when we touch them with information, an offer, an answer. They will experience marketing as a service rather than noise.

Center for CIO Leadership: Doesn’t this new capability to analyze data — and advise the other members of the C-Suite about business performance — fundamentally change the role of the CIO?

Jon Iwata: Yes, most definitely. As technology moves to the front office, the CIO will be expected to help the CMO, the CHRO, the CFO and line-of-business leaders take full advantage of these new capabilities. The CIO may not need to be a deep expert in marketing, for example, but certainly they will need to understand what CMOs are trying to build and deliver for the company. The CIO will be a partner as we build out these new capabilities – what some are calling ‘systems of engagement’ – and ensure that these systems are integrated with the rest of the company’s enterprise systems.

Center for CIO Leadership: It sounds like CIOs have to develop their business skills, as well as their technical acumen, to help lead change at their companies. What would you say are the most important qualities required from leaders today?

Jon Iwata: Great leaders must be good listeners to start with. In today’s world, they need to be role models for collaboration, bringing teams together and overcoming historical or other reasons for working in isolation. The solution to most of our business problems today relies on a strong ability to integrate — to see the bigger picture, and the perspective others bring to the table — outside one’s own domain. Very often, that collaboration opens new paths to innovate and to provide value to the organization that a single function or group can not deliver by themselves.

Center for CIO Leadership: You will be giving the keynote address at the upcoming forum in Paris where IBM invited CIOs to bring their Chief Marketing Officers along. What’s behind the new partnership between CIOs and CMOs?

Jon Iwata: Our worlds are converging. Technology is transforming how marketing is understood, practiced and led. And marketing is changing how IT will be used in the company. So, CIOs and CMOs need to work together on major initiatives like a master data management strategy, social media, and building these systems of engagement so we can reach customers through the channel or device of their choice. CIOs and CMOs will be the co-designers of their company’s total customer experience.

Center for CIO Leadership: What advice might you have for a CIO interested in forging a strong partnership with the CMO?

Jon Iwata: Seek to understand – and shape — the CMO’s agenda for transformation. Help the CMO understand where to start – for example, a master data management strategy that results in a single, accurate view of the customer as an individual. Help the CMO know what he or she doesn’t know – about security, standards and the importance of integrating marketing systems with e-commerce, CRM and other critical business systems. Understand the need for speed. CMOs and their teams operate in both short-term and long-term cycles. They will want innovative ideas from the CIO on how to deploy capabilities and iterate very quickly.

At IBM, the marketing and CIO teams are working to gather information from virtually every interaction, transaction and situation involving our clients. We want to be able to monitor what individual customers and our competition are saying about our company and our brand. In our company and in our customers’ companies, we’ve seen great success when IT experts are actually embedded in marketing organizations so that the two groups of professionals can better communicate and collaborate.

Center for CIO Leadership: You talk about the “authentic enterprise.” What do you mean by that?

Jon Iwata: One of my colleagues says that in this world of near total transparency, “how you are is who you are.” Customers, neighbors, suppliers, employees can share with the whole world what they see and experience. Of course, their first-hand experience with your brand has far more influence over people’s opinions and perceptions than any formal communication or interaction we can put into the world. An authentic enterprise, therefore, is a company that truly lives what it stands for. This is not about ethics. This is about what makes IBM, IBM – and ensuring that we are actually living up to that in every corner of our company.

Center for CIO Leadership: Thanks for taking the time to talk with us.

Jon Iwata: My pleasure.

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Related:

Social Business at IBM: The Global Social Media Summit – The Authentic Social Enterprise London, 10/3  (Blog post by Joerg Winkelman)

Understanding Big Data – Get the eBook

Insights from the IBM Global CMO Study

What are your thoughts on CIO/CMO collaboration in this age of the data explosion? Tell us in the Comments.

IBM India’s Chief Technologist on Smarter Cities Innovations

More than 400 CIOs and other company executives recently attended IBM’s Smarter Cities event in the Capital Region of India.  They worked with city planners on ways to apply technology to solve some of the worst problems in population centers.  To mark the event, the Center for CIO Leadership interviewed Dr. Manish Gupta, IBM’s Chief Technologist for India and Asia and Director of the research laboratory developing new technology for governments and companies around the globe.  Read the interview here:

Dr. Manish Gupta is the director of IBM’s India research laboratory as well as IBM’s Chief Technologist for India and South Asia.The laboratory’s researchers work in tandem with IBM consultants to help CIOs and other executives resolve challenges in business and government.

Center for CIO Leadership: Dr. Gupta, could you tell us about some of the real-world challenges you are helping CIOs solve?

Dr. Manish Gupta

Dr. Gupta, IBM India

Dr. Manish Gupta: We have worked with the CIOs of several of India’s major banks on one very common challenge: each line of business has its own copy of the database of customers. When you are trying to unify this information, it is particularly challenging in a country like India because of the lack of standardization of how we write our names, and more so our addresses. With our colleagues at the India Software Lab, we have made a significant difference in the quality of data.

In another example, as we talked to various CIOs, we learned that often the infrastructure – particularly the data warehouses – that is necessary to do analytics isn’t as sophisticated as in other parts of the world. So what we have done is come up with a lightweight solution which we call “Edge Analytics” that allows these clients to derive very interesting insights simply from the analysis of information at the edge of interaction with their own customers. It could be over the Web channel because a lot of these banks offer Internet banking. While customers are conducting transactions on the Web, the bank can analyze some of their recent transactions and, with those insights, offer the customers additional opportunities to drive more revenue.

Center for CIO Leadership: We hear from CIOs around the world that this ability to better understand what  individual customers need — and what kind of products and services they’re looking for –  is key to the company staying competitive in today’s world. Can you give us an example  of the customer insights you’re uncovering?

Dr. Gupta: One example, which is now part of IBM’s Managed CRM services offering from Global Process Services, is called “Voice of the Customer Analytics.” It works like this: when a customer calls the company’s contact center or sends and email to a service representative or has a live Web chat with an agent, Voice of the Customer Analytics evaluate all these interactions. And it does things like sentiment mining to see whether these customers are happy with, or dissatisfied with, certain products and services. The analytics also identifies common issues that different customers might be complaining about.

This technology also is able to link the unstructured information from emails and call center notes and transcripts with the structured information about the customer in the company’s databases. And link these two sources together to gain additional insight about a customer’s behavior.

In a pilot of this technology with a car company, we were able to find out whether particular customers who are dissatisfied are also thinking about buying a different car. If they are, it is particularly important for the contact center agents to turn the customer’s attitude around before he leaves the company and buys elsewhere. This kind of customer “churn” – when a customer changes car brands – is extremely expensive long term to an automotive manufacturer. We’re suggesting proactive action these companies can take to retain their customers’ loyalty.

We’re also piloting an idea called the “multi-channel next-best action” where we help the contact center agent ask the right set of questions and guide the customer toward certain promotions and offers that the customer is likely to find attractive and accept. Our pilot showed very promising results.

Center for CIO Leadership: You mentioned the challenge of linking unstructured data and structured data, which is something we hear about quite a bit with the volumes of information available to CIOs. They wonder how best to process all that data and make sense out of it. How might your research help resolve some of those challenges with “big data”?

Dr. Gupta: You’re absolutely right, the volume of information that our CIOs are dealing with is growing enormously. At IBM, we describe big data in terms of the “three V’s”: the growing volume of data; the velocity of data; and the variety of data. Interestingly, our researchers identified a “fourth V” and that is the veracity or reliability of the data.

Often, a lot of the information our CIOs are dealing with is highly uncertain, highly noisy. For example, often the information that is posted on social media sites is either ambiguous or downright misleading. And the even the company’s own customer information tends to be very noisy.

So we are coming up with effective techniques to both cleanse the data and to drive robust insights from potentially noisy data. We are working closely with the IBM product groups to bring these capabilities into our products and deliver real value to our clients.

Center for CIO Leadership: Your research team is very involved in the IBM Smarter Cities initiative and IBM’s Chairman, Sam Palmisano, just hosted a global event in Gurgaon. Could you describe some of the innovations you’re working on to make cities a better place to live and work?

Dr. Gupta: We recently had massive power blackouts in India. We are developing technologies that help with real-time situation awareness and management and we believe we can help avoid some of these kinds of grid blackouts in the future.

We’re working with the University of Brunei to help flatten the peaks in demand for electrical power and spread the load to other times when the demand is lower, to make the overall power system significantly more efficient and cost effective. We developed a special kind of “plug” that goes in-between your electrical device — like an air conditioner or water heater – and the socket. That plug senses peaks and imbalances in grid demand and automatically senses when to turn on your device.

Center for CIO Leadership: So you’re figuring out how to balance power consumption in densely populated cities. How about balancing out the traffic flow?

Dr. Gupta: Our researchers and people at the India Software Lab have been involved in working with the Land Transportation Authority of Singapore, which has one of the most advanced systems for traffic prediction. We’re complementing their work by leveraging mobile data to sense traffic congestion.

And one of our researchers came up with the idea of simply analyzing the sound that is coming from the road. By matching the sound signal to the signature of the kind of sound that is generated in free-flowing traffic versus medium-flowing traffic versus stuck traffic, we can correctly classify the traffic flow with more than 95% accuracy.

But of course we are going beyond that. We have a project underway to look at different sources of input from mobile phones and from social media feeds that people might be posting on Twitter about the state of traffic and doing analysis from these different sources and fusing all of that data together to come up with better insights about the state of traffic.

Wherever people are using Smart phones, we can analyze GPS data, and we can also look at call detail records and cell phone tower handoffs to understand the location of people. And then you can combine that with other sources to get insights about where people are at a given point in time. We’re able to provide city officials with very interesting insights about mobility patterns. Where are people living in the city? Where are people going to work? What are the spots where there is potential congestion during certain hours in a day? And how do you now design things like your public transportation? How do you design more effective bus routes or a more effective metro train route to effectively provide better public transportation options that meet the real needs of the residents of the city?

Center for CIO Leadership: It sounds like a very clever idea to use people’s cell phones, and also the sound of traffic, to help ease congestion. No doubt there will be thousands of commuters very thankful for this effort that you’re involved in. What other projects are helping make life better?

Dr.Gupta: We have a very exciting pilot planned in Saudi Arabia to apply our Spoken Web technology to help Hajj pilgrims access the Web through voice commands. Spoken Web makes it possible for people who don’t have Internet access to use the Web. Anyone with access to a mobile or land line phone can listen to information on the Web. This technology is particularly useful for people who live in remote locations and people who cannot read and write. We’re also using Spoken Web to help farmers in Africa access crop information. And we’re working on a Spoken Web pilot in India to provide better information to some of the farmers about diseases that might affect their livestock.

We also have begun work with the University of Brunei and Ministry of Industry and Primary Resources in Brunei to model the crops. We can use this detailed weather forecasting, for instance, to decide which are the right places to grow the rice crop, based on the kind of precipitation in those locations. And also come up with better advisories of certain diseases that might be actively driven by certain weather conditions.

We can also apply these detailed weather forecasts to predict the output of solar and wind farms during a given window of time. Once you are able to better predict that output based on the weather conditions, you can do better planning in terms of how much of that renewable energy output are you going to be able to put back into the grid.

In our work, we found it interesting that Brunei is the very first and the only country in the world to have a high- resolution weather forecast of the entire country. So we can come up with fairly precise forecasts of the temperature, precipitation, wind velocity and so on for very small geographical areas. We’re building hydrological models to see how we can predict flooding when it rains and help Brunei officials plan for disaster management.

Center for CIO Leadership: We’ve all seen television coverage of the incredible damage caused by floods and tsunamis around the world. It must be very rewarding to help lessen the devastation.

Dr. Gupta: Oh absolutely. When we are able to apply our expertise, come up with effective solutions and solve some of these real-world problems, it’s an extremely satisfying feeling.

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More:

Center for CIO Leadership

Get your (electronic) copy of the 2011 IBM Global CIO Study, The Essential CIO

The Essential CIO portal

Executive Exchange – Insights for Smarter Leadership

Case study from the Institute for Business Value (IBV) – AzkoNobel, Balancing IT Efficiency with Customer Agility