Forrester Survey Reveals Rising Customer Expectations & Improving Efficiency Drive Firms’ Transformation Efforts

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<ul><li><p>A Forrester Consulting </p><p>Thought Leadership Paper </p><p>Commissioned By HP </p><p>October 2014 </p><p>Rising Customer </p><p>Expectations And </p><p>Improving Efficiency </p><p>Drive Firms Transformation Efforts </p></li><li><p>Table Of Contents </p><p>Executive Summary ........................................................................................... 1 </p><p>Firms Are Forced To Make Significant Changes To Meet Customers </p><p>Expectations ....................................................................................................... 2 </p><p>CEO Leadership Breaks Down The Organizational Silos ............................. 2 </p><p>Customer Journey Mapping Eliminates Channel Silos And Justifies </p><p>New Technology Spending ............................................................................... 4 </p><p>Significant Investment On New And Upgraded Technology Platforms </p><p>And Applications Improves The Experience .................................................. 5 </p><p>The Creation Of Digital Teams Drives Reskilling ........................................... 8 </p><p>The Transformation Sets The Stage For Creating An Agile Execution </p><p>Culture Across Business And Technology .................................................... 9 </p><p>Transformation Dos and Donts ..................................................................... 11 </p><p>Key Transformation Innovation Recommendations ................................... 11 </p><p>Appendix A: Methodology .............................................................................. 12 </p><p>ABOUT FORRESTER CONSULTING </p><p>Forrester Consulting provides independent and objective research-based </p><p>consulting to help leaders succeed in their organizations. Ranging in scope from a </p><p>short strategy session to custom projects, Forresters Consulting services connect </p><p>you directly with research analysts who apply expert insight to your specific </p><p>business challenges. For more information, visit forrester.com/consulting. </p><p> 2014, Forrester Research, Inc. All rights reserved. Unauthorized reproduction is strictly prohibited. </p><p>Information is based on best available resources. Opinions reflect judgment at the time and are subject to </p><p>change. Forrester, Technographics</p><p>, Forrester Wave, RoleView, TechRadar, and Total Economic Impact </p><p>are trademarks of Forrester Research, Inc. All other trademarks are the property of their respective </p><p>companies. For additional information, go to www.forrester.com. [1-RLHU8C] </p></li><li><p>1 </p><p>Executive Summary </p><p>Customers are changing their behavior faster than </p><p>companies can evolve their business models, operational </p><p>processes, and technology platforms. As a result, firms are </p><p>changing their organizational structures and technology </p><p>platforms to break down the silos that hinder delivering </p><p>compelling customer experience. </p><p>In May of 2014, HP commissioned Forrester Consulting to </p><p>conduct research on digital transformation efforts across a </p><p>mix of industries. The research delved into the business </p><p>drivers, process changes, technology implications, and skills </p><p>retraining that underpin firms re-engineering initiatives. </p><p>Forrester conducted 11 in-depth phone and face-to-face </p><p>interviews with CEOs, COOs, CIOs, and transformation </p><p>leaders across North America, Europe, and Asia from June </p><p>2014 through September 2014. Even though their </p><p>transformations are multiyear projects, these business </p><p>leaders are already seeing dramatic increases in Net </p><p>Promoter scores for customer satisfaction, the ability to </p><p>compete on service not price, and more engaged </p><p>employees with lower attrition. </p><p>KEY FINDINGS </p><p>As firms undertook their transformation journeys, Forresters </p><p>research uncovered a number of critical success factors: </p><p> CEO leadership breaks down the organizational silos. Senior managements buy-in is critical to creating a </p><p>culture of serving the customer. </p><p> Customer journey mapping (CJM) eliminates channel silos and justifies new technology spending. Over </p><p>50% of the interviewees leveraged customer journey </p><p>maps to articulate the needs/requirements of their </p><p>transformation. </p><p> Significant investment in new and upgraded technology platforms and applications improves the </p><p>experience. Rebuilding legacy systems as well as </p><p>Internet platforms is at the center of firms re-engineering. </p><p> The creation of digital teams drives reskilling. Companies are making major changes to their skill and </p><p>process portfolio as part of the transformation. </p><p> The transformation sets the stage for creating an Agile execution culture across business and </p><p>technology. Companies efforts are ongoing as they </p><p>develop a more adaptive sense-and-respond culture. </p><p>We needed to meet our end customers </p><p>expectations that had been set by Internet-</p><p>based ridesharing services for real-time </p><p>information and self service via a mobile </p><p>app. </p><p> CEO, North American transportation company </p><p>We had to build a new broker/middleware </p><p>platform that sits between our tablet apps </p><p>that drivers use and our legacy systems </p><p>with the data. </p><p> VP of application development, European </p><p>transportation company </p><p>The CEOs direct reports are part of our </p><p>customer experience council. He wants to </p><p>see our value proposition in terms of </p><p>customer journeys. Only by getting to that </p><p>level of detail can you provide a </p><p>differentiated experience. </p><p> CIO, Asian bank </p><p>The CEO and CFO do not want to be asset-</p><p>heavy losers where an agile, digital startup </p><p>steals the customer away. </p><p> CIO, European logistics company </p></li><li><p>2 </p><p>Firms Are Forced To Make Significant Changes To Meet Customers Expectations </p><p>From June 2014 to September 2014, Forrester conducted </p><p>11 in-depth interviews with CEOs, CIOs, and digital </p><p>transformation leaders from financial services, hospitality, </p><p>logistics, manufacturing, retail, telecom, and transportation </p><p>companies in North America, Europe, and Asia. </p><p>Respondents faced a number of challenges that forced </p><p>them to undertake a major redesign and renovation of their </p><p>businesses. But at their core, these companies were </p><p>grappling with how to meet rising customer expectations </p><p>and grow the business. </p><p>We needed to meet our end customers </p><p>expectations that had been set by the Internet-</p><p>based taxi startups delivering real-time </p><p>updates and self service via a mobile app. At </p><p>the same time, we needed to reduce the volume </p><p>of calls to our more expensive call center. </p><p> CEO, North American transportation company </p><p>To truly become customer-centric, interviewees were using </p><p>tools like customer journey mapping a visual </p><p>representation of the series of interactions between a </p><p>customer and a company that occur as the customer </p><p>pursues a specific goal to change their processes, </p><p>customer loyalty systems, technology platforms, skills </p><p>portfolio, and coordination with their business partners. </p><p>One of the more interesting benefits to come out of the </p><p>customer-centric investments was lower operational costs </p><p>(see Figure 1). By breaking down the organizational silos </p><p>and simplifying their processes from a customer-first </p><p>perspective, firms saw greater efficiencies from the </p><p>customers doing their own ordering, lower call center </p><p>staffing requirements, and streamlined decision making. </p><p>During the interviews, we uncovered five critical factors that </p><p>were shared across the majority of respondents: 1) CEO </p><p>leadership breaks down the organizational silos; 2) </p><p>customer journey mapping eliminates the channel silos and </p><p>justified new technology spending; 3) significant investment </p><p>on new and upgraded technology platforms and </p><p>applications improves the experience; 4) the creation of </p><p>digital teams drives reskilling; and 5) the transformation sets </p><p>the stage for creating an Agile execution culture across </p><p>business and technology. </p><p>Were moving to a very customer-centric approach what can we do to make this as simple as possible for our customers? We want </p><p>to add value to what theyre doing and to encourage them to buy groceries. </p><p> VP of applications, North American retailer </p><p>CEO Leadership Breaks Down The Organizational Silos </p><p>In the majority of cases, the CEO or at least the CIO was </p><p>driving the vision and the transformation efforts within firms. </p><p>The research shows that senior managements involvement </p><p>was critical in two key areas: </p><p>FIGURE 1 </p><p>Better Customer Experience Drives Improved Operational Efficiency </p><p>Source: Forrester Research, Inc. </p><p>Improved</p><p>operational</p><p>efficiency</p><p>Better</p><p>customer</p><p>experience</p></li><li><p>3 </p><p> The CEO had the vision about being the leader in customer service. He oversaw and drove the </p><p>original strategy definition and then the focus </p><p>on customer experience. Now, 80% of the </p><p>executive teams conversations center on customer journeys, and we have 100 projects in </p><p>progress to improve it. </p><p> CIO, Asian bank </p><p> Creating the business/customer vision at the center of the transformations. To ground and focus the re-</p><p>engineering efforts, the CEO plays a crucial role in </p><p>defining and communicating the goal of the projects. </p><p>Senior leadership is also critical in holding the business </p><p>accountable to make the required culture, process, and </p><p>technology changes (see Table 1). Forrester found that </p><p>firms transformations centered on becoming more </p><p>customer-experience-focused and putting the client at the </p><p>center of the organization.</p><p>TABLE 1 </p><p>North American Transportation Company </p><p>Drivers of the </p><p>transformation </p><p>This transportation company needed to meet travelers needs for real-time status updates and </p><p>self-service that were being set by an Internet-based taxi/limo startup. At the same time, it needed </p><p>the empowered traveler to use the mobile app to offload calls from its expensive call center. </p><p>Scope of the </p><p>transformation </p><p>The transformation involves all customer-facing systems, dispatch, and driver communications, as </p><p>well as back-office processes. Its an end-to-end commitment to streamline the customers </p><p>experience. </p><p>Changes in skills </p><p>portfolio </p><p>The firm had to master Agile development processes, customer experience thinking and design, </p><p>API management, and a new security model based on protecting data rather than networks. </p><p>Technology </p><p>implications </p><p>To accomplish this, the firm had to re-architect its closed back-end systems and security model to </p><p>integrate its core reservation system with third-party travel sites and provide better tools for </p><p>different customer segments (personas). </p><p>Innovative </p><p>transformation </p><p>practices </p><p>It started with a focus on the overall flow of information between the company and different </p><p>customer segments (personas) and not on specific devices or applications. This led to a clearer </p><p>understanding of how travelers use information and the best ways to improve their travel service. </p><p>Benefits and </p><p>outcomes </p><p>Travelers feel more in control. The firm now competes with a travelers tool to help enterprises </p><p>better manage travel. The firm also now competes with the analytics tools that it provides to help </p><p>customers better manage their overall travel and not just the price of the ride to airport. </p><p>Next steps </p><p>The firm plans to integrate systems with even more third-party travel sites and supporting systems </p><p>(hotels, airlines, etc.). It will improve travel analytics tools for corporate clients so it can better </p><p>optimize overall costs (rather than compete on reduced fees). </p><p>Source: Forrester Research, Inc. </p></li><li><p>4 </p><p> Breaking down the organizational silos impeding great customer experience (CX). The focus on </p><p>improving customer experience often uncovers the critical </p><p>need to break down the business structures that impede </p><p>serving the customer. CIOs are creating cross-function </p><p>teams within IT as part of those transformations to make </p><p>technology management more responsive and agile. In </p><p>parallel, CEOs are breaking down the channel silos and </p><p>other parochial organizational thinking to simplify the </p><p>customer journey. </p><p>The transformation started as a discussion </p><p>with me and the new CEO. Initially, it was </p><p>about streamlining and simplifying IT. But </p><p>very quickly the focus shifted to breaking down </p><p>the organizational product silos so we could </p><p>build and deliver more connected digital </p><p>products and services. </p><p> CEO, healthcare products division, European </p><p>manufacturer </p><p>Customer Journey Mapping Eliminates Channel Silos And Justifies New Technology Spending </p><p>One of the critical tools in respondents digital </p><p>transformation was customer journey mapping. </p><p>We invested in a new CX team. Previously, mapping the customer journey for us was just </p><p>tracking the internal sales or lead generation </p><p>process. When youre mapping the customers actual journey, its about understanding everything that touches that journey. We </p><p>invested in a team and gave them responsibility </p><p>on customer experience. </p><p> Executive vice president, platform services, North </p><p>American business services company </p><p>The interviewees were using CJM as the cornerstone of the </p><p>transformation in three fundamental ways: </p><p> Creating outside-in customer perspective to make vision actionable. The use of this process tool became a </p><p>critical way to illuminate the bottlenecks and frustrations </p><p>of customers as they tried to execute tasks like ordering </p><p>or placing a customer service request. Firms where using </p><p>customer interviews captured on video to cut through the </p><p>politics and deliver the bad news to senior management. </p><p> Understanding of how siloed organizations block great customer experiences. In many companies, one </p><p>of the biggest CX challenges is creating a holistic view of </p><p>what the customers are trying to accomplish. CJMs help </p><p>the business see the entirety of the workflow and not just </p><p>their narrow, channel-only perspective. </p><p> Establishing the ROI for legacy application rewrites and upgrades. One bank used the process to define the </p><p>need to rewrite legacy systems. Like most companies, the </p><p>back-end rationalization efforts have been caught in an </p><p>endless loop with IT talking about the costs and the </p><p>business complaining about the lack of business agility. </p><p>To break the logjam, the bank used CJM to clearly </p><p>document every instance of where the current systems </p><p>were not working and create a clear value statement for </p><p>redesigning the systems. This business context gave the </p><p>CEO the rationale and confidence to sign off on a major </p><p>legacy rewrite (see Table 2). </p><p>The CEOs direct reports make up our customer experience council. He wants to see our value </p><p>proposition in terms of customer journeys. You </p><p>need that level of detail before you differentiate. </p><p>We show the customer feedback with videos </p><p>from the CJM exercises so the CEO hears the </p><p>cold hard truth about what works and what </p><p>does not. It drives a higher degree of honesty </p><p>and accountability. </p><p> CIO, Asian bank </p></li><li><p>5 </p><p>Significant Investment On New And Upgraded Technology Platforms And Applications Improves The Experience </p><p>As the embodiment of the respondents processes and </p><p>organizational models, transformation initiatives quickly </p><p>uncovered issues and challenges in the existing technology </p><p>platforms and business applications. </p><p>We had to build a new broker/middleware </p><p>platform that sits between our tablet apps and </p><p>our legacy systems. It does user authentication </p><p>and it manages the...</p></li></ul>