Today’s sermon is about customer relationship management. Or more accurately, the lack of it in most corporations, especially telcos. So that’s the vicar’s punchline. Now on to the interminable joke.
All corporations maintain relationships with their stakeholders.
The first is with their financial stakeholders. Until you have liquid capital, you can’t hire any employees, buy production equipment, or acquire inventory for sale. Those financiers may be shareholders, bondholders, or other creditors. As a society, we’ve created a special technology to manage this task, called double-entry bookkeeping. This bean tracking helps us answer an important question: is this company profitable, and therefore deserving of further capital? We’ve also created a priesthood to manage that accounting technology, and established a lot of complex rules about what can and can’t be placed in the asset and liability columns. The priests live in a monastery called the Finance department.
For the hard of thinking, I’ll spell it out again. We have created a specialized function for managing the relationship between a company and its money. Every company of any size has a dedicated organization to the operation of this technology. But that function is just a service role. Another part of the company, the Sales & Marketing team, is typically carrying the can for actual profit and loss. If the figure at the bottom of the annual report summary page comes in parentheses, the head of Finance generally keeps her job as long as the loss is reported accurately.
Once you’ve acquired some capital, you need some people to do things with it. You lure in employees, contractors, serfs and slaves with wild promises of reward, freedom and weekly foosball championships. These people need contracts of employment, relocation packages, and purging of individual identity (a.k.a. “induction training”). The managers who make the hiring and firing decisions don’t want to do all that messy admin work. And they particularly don’t want to deal the subsequent police work of tormenting wayward employees with formal reprimands. Even worse is the execution of waves of random headcount reduction to get rid of the people you just hired. So along with the Finance priests, we have the Human Resources department. Think of it as the people equivalent of the sewage system. Clean stuff comes in, nasty stuff goes out, someone else lets you pretend you don’t know how these two things are connected.
Again, the HR department doesn’t really carry the can for poorly performing teams and bad hiring decisions. The managers of those hiring business units are in the firing line (if you’ll excuse the pun).
The malcontent employees need some soulless work environment in which to fail to thrive. Something that keeps the rain off, the heat in, and the bugs out. So we create a Facilities department. Whether any productive work occurs in a building won’t affect the VP of Facilities’ annual bonus. He just needs to demonstrate he’s paying a few cents less than the competition for floor space, and that no employees were allowed to evade the cube police and take control over their work environment.
So now we have legions of warm, deliriously happy and well-paid people. They just need to do something useful, like create a product or a service. Now they need some PCs to surf the web with, and advanced phones with spiffy voicemail features to screen out all contact with customers. Plus a raft of expensive and poorly-written business applications, and a bit of network string to hold it all together. Guess what. We have a dedicated function for this evil technology stuff. The IT department has all the grease monkeys of the server room supplied with freshly piped code to install and break.
But the IT department doesn’t directly bear responsibility for the technical performance of the product. Instead the Product Development, Product Management and Project Pipeline folks specify features and then track product operational metrics. If a product is sick and doesn’t get better, the Pipeline team aren’t allocating the money to the right get-well activities. The VP of Everything To Do With Products gets the chop when the products are bought by customers in droves and then fail to work.
Of course, those products don’t just appear out of thin air. The IT people need software and servers to support their creation and operation. The bits of the product need to be sourced from somewhere before being assembled and retailed. This means spending money on supplies. You can see what’s coming. We’ve got a team to do this, Supply Chain Management. They’re the conservationists of the enterprise, preventing the premature logging of the money groves. But it’s the head of Product, IT, Production, Logisitcs or Retail that gets the pink slip if the wrong stuff is asked for and bought.
I hope by now you’ve seen the pattern. (If not, you should be smarter. Sorry. Can’t help you.) We’ve looked at key relationships of a corporation: with its financiers, employees, physical capital, technology, and suppliers. In each case we found a specialist function that manages that relationship and acts as an internal supplier. Finance, HR, Facilities, IT, and Supply Chain Management are never profit centers. You go to jail for trying to change this. In each case there were accountable business units calling on these services.
We have, of course, missed something. Just a teeny, weeny oversight. Those belligerent, money-pinching customers. They’re stakeholders in the business too. Who looks after technical execution of that relationship?
Oh dear. Perhaps Fred does in Finance. Or Mary in Marketing. Didn’t Carol in Customer Care run the CRM project? But Steve in Sales is jealous of that project. Paula in Product has her concerns too.
We’ve got a mess. The management of the most important relationship is scattered all over the place. Fred wants to consolidate his credit management across all the accounts each customer has. Mary wants to understand the customer’s needs at the household level, not just the individual subscriber. Carol wants to know if this is the same person who called in with a complaint on their other account last week. Steve is desperate to stop sending round multiple salespeople making duplicate sales calls for each product line. Paula’s afraid of all those passwords the customers have to remember. Will anyone be able to get past the login screen to the new product?
Funnily enough, these issues have a common cause, and it’s already a recognized (if still emerging) discipline. Identity Management. In a way, it’s just how you answer a really simple question: who is this person? That’s it. Unfortunately, a world of pain and complexity awaits those who enter. Identity Management is the Fermat’s Last Theorem of business. Easy to pose. Fiendish to solve.
The four key axes are as follows:
1. How do we locate this customer? You don’t know someone unless you can ask for data that uniquely differentiates them from everyone else. This includes the obvious things like account numbers and login user names. It also includes those profile fields that you use to search for individual customers: name, address, social security number, etc.
2. How do we authenticate this customer? You don’t know them if someone else can act as an impostor.
3. What are they authorized to do? You don’t know someone unless you place appropriate bounds on their capabilities. (Is it safe to give someone a pair of scissors? Only if you know they aren’t a young child or a psychopath.) You can’t protect your customer’s privacy either unless you constrain what other customers can see and do.
4. How else do we know this customer? Your customer may subscribe to multiple products that you offer. You don’t know your customer until you get a complete picture of their portfolio of relationships with you.
None of these activities is trivial. Coordination of the policies on data collection procedures and storage formats is a lot of effort. Federated authentication is not easy to retro-fit into an operating company; too many legacy IT systems and incompatible security profiles. Getting the permission of customers to do things is a pain. Accurately matching multiple customer records is really hard.
This sounds at least as difficult as double-entry bookkeeping. Harder than leasing a new office. As tough as hiring and firing.
So here’s my prediction. In ten to twenty years from now, every large corporation will have an extra VP. This person will be tasked with the technical execution of the customer relationship. They won’t be responsible for P&L, product performance, sales targets, or IT system uptime. Just for knowing the customer, and enabling business units to build sales from that relationship. And any corporation that gets there early will have a large lead over its competitors. Particularly in an industry where product differentiation disappears and outstanding service execution is the new strategic imperative.
Welcome the VP of Identity Management.
Posted by Martin Geddes at 12:03 AMTrackBack URL for this entry:
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Can I put in a plug for having a CHO (Chief History Officer) too?
Posted by: at August 23, 2004 02:17 PM