Digital Ecosystem: why your digital customer strategy will fail without a solid technical foundation

Engaging a digital customer requires harnessing the power of data, embedding customer focus across the digital ecosystem, and enabling agility through a technology bedrock.

Technology has made it easier to reach customers and more challenging to impress them. Organisations in all sectors today are desperate to win the attention of customers. For example, consumers can now get 3D printed vitamins, use virtual reality to shop for holidays and even get suggestions on their hairstyle from their smart mirrors. To illustrate the seismic change in consumer behaviours, we use the example of US traditional retail, which grew by 4% in 2016 compared to Amazon, which grew by 40%.

Whilst businesses realise that understanding changing needs and delivering better value to their customers is critical for survival, what is less clear is how to align the focus on customer with digital technology. This in many ways (in our view) is the hard bit. To help guide to some answers, we believe there are three fundamental technological enablers that must be addressed to avoid failure: 

  1. Defining effective customer data governance before implementing analytical solutions
  2. Embedding the ‘customer focus’ into the organisation’s ecosystem 
  3. Enabling agility through a technology platform

Let’s look at each one in more detail.

Define effective data governance before turning customer data into value

In today’s age of big data where every sensor, touch point, interaction and transaction generate a footprint, customer data has become a critical source of competitive advantage. Organisations today have access to technology that interprets customer data and enables businesses to offer better services that engage and delight their customers. 

The challenge is that most traditional organisations have organically grown their technology estate over time. Data has been recorded in multiple ways, making seamless capture of data and generation of insights about customers difficult. Organisations responded by developing data warehouses and service-oriented architectures, deploying solutions from vendors like IBM and Oracle. These vendors use AI to perform index matching, implement big data lakes, and bring in visualisation tools. However without data governance, tools became just new layers in technology stacks, and data lakes turned into data ‘swamps’ with an unclear strategy of what the data is being used for at a great financial cost to the business1.

Before deploying technology to unlock the power of the customer data, organisations need comprehensive data governance and data management from capture to customer value. They must harness data seamlessly across their business, their partners and customers. This includes:

• Developing a data roadmap of all the key components of the business such as customers, sales channels, products and suppliers. Each of these components should reflect the digital journey of any customer and should be classified to enable a unified data model. 
• Defining data governance structures to oversee new data capture with an emphasis on triaging and verifying the quality of data as it comes in. Simply feeding historic data sets to an algorithm may lead to incomprehensible results because of the data bias in the recorded information. For example, historical online sales data may be based on behaviours of younger customers that were more active online, rather than their parents.
• Leveraging advanced and emerging data solutions (including machine learning). These should exist on any organisation’s roadmap and will be a key differentiator in engaging the digital customer. The power this will deliver in the future is incalculable. For example, machine learning solutions will have the power to identify when each customer is most likely to purchase a product due to external factors such as weather, political events or even relationships with other customers. 
• Not being over prescriptive in what data is captured. Machine learning can deliver insight by triangulating multiple data sources and identifying patterns of customer behaviour to drive growth. 

Embedding the ‘customer focus’ into the organisation’s ecosystem 

A relentless focus on being customer centric has become critical for surviving in the market. In our introductory perspective we provided an overview of four interconnected areas within any organisation’s digital ecosystem. Whilst the digital customer area specifically focuses on enabling a better customer experience, what is often overlooked is that customer centricity should drive the entire ecosystem. Everyone owns the customer strategy and each part of the digital ecosystem must work seamlessly together to serve, engage and delight the customer: 

•  Digital customer is directly focused on customer, engages them throughout their journey, and provides experiences and services that delight them.  
•  Digital products and services enable organisations to provide customers with differentiated products and services, or embedding digital features into traditional products.
•  Digital workforce empowers the teams to become more efficient, agile and courageous in engaging and serving customers. The workforce benefit from having the right tools, information and digital ways of working that allow them to deliver a customer centric service.
•  Digital infrastructure and operations ensure seamless and agile design, production, distribution and maintenance of products and services. Fuelled by emerging technologies such as IoT, it creates a lean organisation where decision making is quick and transparent to respond to customer queries. 

 

 

Figure 1 Digital Ecosystem

All parts of the ecosystem must capture the customer’s journey and interactions with the enterprise.

In the future, this will mean getting a complete picture of the digital and physical worlds, with data points linking the ecosystem together. This may be the customer’s interactions on social media, their visits to physical stores, data from sensors embedded into organisation’s products, customer information processed by the workforce, or operational data collected throughout manufacturing and logistics. 

Enabling agility through a technology platform

Leaders in digital customer, such as Amazon, are constantly changing, adapting or improving their offerings based on customer insights. According to research by Gartner2, 66% of CEO’s expect their business model to change in the next three years, whilst 49% of CIO’s claim organisational re-design is already underway. 

This transition puts pressure on the supporting technology and infrastructure. We often see organisations looking to build excellence within their digital customer offering by deploying technologies ranging from CRM, mobile, web, data analytics, apps to Software-as-a-Service tools. They also are fully aware that emerging technologies such as predictive analytics and AI need to be harnessed to understand and engage customers. Whilst these technologies serve their own purposes, firms must get the fundamentals right first. 

Businesses should start by implementing a technology platform as they cannot afford rebuilding their landscape every few years. Organisations require a backbone architecture that allows them to build dynamic and scalable solutions that will engage and delight their digital customers. The underlying technology needs to be flexible to adapt to ever increasing changes, and secure to ensure trust from customers and partners. 

Building a technological foundation in the past ten years included virtualisation, containers, modularisation of computing resources, development of microservices that structure applications as a collection of loosely coupled services. The next ten years will be driven by embedded technology. Algorithms and logic are being moved from the organisation’s back end to customers with an intention to constantly analyse, engage, excite. Having a flexible technology estate will enable businesses to adapt to the changing landscape.

Use three enablers to deliver a digital customer strategy

The three basic ingredients of the digital customer strategy are the data governance, customer focus across the digital ecosystem, and technological architecture that is both flexible and secure. Today’s digital natives and start-up organisation are starting with these components from the beginning, and organisations without them are more likely to fail.

At Moorhouse, we help organisations become data driven, customer centric and achieve their digital ambitions by offering a range of Digital & Technology and Customer services.

We will continue examining each of the four core areas of a future digital ecosystem. Our next perspective will be on Digital Infrastructure and Operations. 

See our previous perspective in the Digital Ecosystem series, which focuses on the digital workforce.

For more information, contact Indi KaliraiNikita Knyazev or Don McShee.

1.  https://data-insider.com/2016/08/pros-cons-data-lakes/
2.  https://www.gartner.com/smarterwithgartner/mobilize-every-function-in-the-organization-for-digitalization/

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For more information please email info@moorhouseconsulting.com

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Don has 18 years of experience leading, advising on, and assuring technology-enabled strategic transformation programmes, strategy and operations.

Don McShee Client Director - Digital & Technology
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Indi is an experienced Digital and Technology Consultant. He has worked across a broad range of sectors in both strategic and delivery based roles, with a passion for new technologies.

Indi Kalirai Senior Consultant
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Nikita has over 10 years’ of technology-enabled change experience.

Nikita Knyazev Manager