Last week, Forrester’s Service Management and Automation team attended FUSION 13, an annual conference jointly hosted by itSMF USA and HDI, in Nashville, Tennessee. FUSION is a key conference for IT Service Management professionals - for three days ITSM pros are immersed in a content rich environment where they're encouraged to share knowledge and learn from one another, as well as from a plethora of industry experts, practitioners, vendors, and thought leaders alike. It's impossible to leave without having made new friends and new discoveries in the realm of IT Service Management. Approximately 2000 ITSM professionals attended the 2013 conference, with the theme "graduate to better service management."
The buzz of this year's event can be easily put into two terms: revolution and status quo. Yes, you read that correctly. And while these two terms are quite contradictory, when put into context they actually are somewhat related - don't worry, we'll explain. First, the status quo:
At FUSION 13, we presented the results from our third annual ITSM survey Forrester does in conjunction with itSMF USA, and not much changed year-over-year. Aside from a few minor rumblings, ITSM maintained the status quo, and in this case, no news... is news:
The end of a quarter forces me to reflect on what I learned in regards to my coverage area: measurement and attribution. From customer insights (CI) pros and marketers, I saw an increased interest in advancing their measurement approaches. On the attribution front, there is an appetite to learn about specific methodologies, use cases, ongoing attribution management strategies, and attribution applications to marketing/media buys. On the vendor side, I saw more advancement in tools, approaches, and offline and mobile data integration. I predict attribution — and general consumer and marketing measurement — will continue to be a hot topic for marketers and CI professionals well into 2014. Specifically, I expect to see more attribution adoption and usage of attribution to measure customer purchase paths and to learn more about customer behaviors and motivations.
In the meantime, let me recap the Q3 2013 measurement takeaways:
Let's face it, IT often suffers from a bad reputation. And in many cases it's well deserved. Over the years many IT leaders attempted to change IT's reputation by empowering other departments to dictate what IT should be doing — and in the process they became order-takers. And the portfolio of projects from well-meaning business leaders mushroomed. To cope with the overwhelming demand, IT established rigorous process around governance, forming committees with the power to determine what IT works on. And almost inevitably, many of these committees are bogged down by politics — meaning IT is not always working on the right things — and at the same time slowing down the whole pace of change. No wonder then that many people across the business spectrum view their own IT group as a slow, unresponsive impediment to getting things done.
But CIOs the world over are actively engaged with their leadership teams in changing IT's reputation. The goal for these CIOs is to shift IT from order-taker to business-partner, helping shape future business strategy and using technology to increase the value their organization brings to the end customers of the business.
This transition is not easy. Nor is it guaranteed to work. Sometimes an IT organization's employees are simply unwilling or unable to embrace the change. Sometimes the reputation of IT is so sullied that nothing short of a cold-reboot will work (organizations going down this route will start by outsourcing all of IT, then they gradually hire back key skills needed to derive more effective business outcomes).
I read this somewhere recently – I think it was the CIO of Intel, Kim Stevenson (quoting IT folklore). But it stuck in my mind, long after the link that I harvested it from had evaporated. I like it since it gets to the heart of the discussion . . . what’s the business problem you are trying to solve. So often I find myself fielding queries where the people on the other end of the phone have decided on a technological solution (a hammer), and are now looking for a problem (the right nail).
The business doesn’t want a hammer or a nail; they want something of value – the house. It’s not important that your solution has this product or that techno buzzword. They don’t care for how cute your big data credentials are, or whether your mobile mojo has trumped your social ace in the hole. These sorts of trends – big data, mobile, social – are just like, well, like the context within which the house sits.
Of course, we need that application delivered to our customers on a digital device nearby to them. Of course, we want that engagement to leverage the history of what we’ve done with that customer in the past – their wants and preferences taken into account. Of course, we want to leverage what we know others in the same context considered the right choice. But we also expect the customer to channel-hop to the Web, and then perhaps wander into a branch or store, and ring up about it to see where things are at (WISMO – what is the status of my order).
Market conditions are changing quickly; firms need to make the best possible business decisions at the right time and base them on timely, accurate, and relevant information from business intelligence (BI) solutions. The repercussions of not handling BI change well are especially painful and may include lost revenue, lower staff morale and productivity, continued proliferation of shadow IT BI applications, and unwanted employee departures. Ineffective change management often lies in the process of preparing the people affected by change rather than in planning the technology implementation. Firms that fail to prepare employees for enterprise BI change early enough or well enough will be left behind. They need to implement a multifaceted series of activities ranging from management communication about why change is needed to in-depth, role-appropriate employee training.
Why change management is so critical? Most strategic business events, like mergers, are high-risk initiatives involving major changes over two or more years; others, such as restructuring, must be implemented in six months. In the case of BI, some changes might need to happen within a few weeks or even days. All changes will lead to either achieving or failing to achieve a business result. There are seven major categories of business and organizational change:
Business process changes
New technology implementations
Changes to business process outsourcing or IT sourcing
The data shows that 70% of corporate change efforts either totally fail, have lukewarm results, or the change never becomes an integral part of the company culture. As I talk to clients about their change efforts, what’s worked and what hasn’t, some clear patterns emerge.
Change is not an event — it’s a process. You make plans for the executive to announce the change to employees. The executive talks about why it’s important for the company to make the change, what the change will look like, and the assistance the company will provide employees during this transformation process. The executive responds to employee questions and recommends that employees discuss any additional questions with their managers. A thoughtful speech, well delivered with empathy around challenges of change . . . it’s good, but it’s not enough. The executives have been thinking about and planning this transformation for weeks or months and know it well. The employees are hearing about the change for the first time, in this hour-long, all-hands company presentation. Anxiety, shock, and fear are typical reactions. Rather than this one-time announcement, make sure executives explain that today’s meeting is the first of many that will be held periodically using different media (web, in-person, email, social network, etc.) to provide updates and answer questions. Remember, half the audience may have heard nothing beyond the statement that major change is going to happen. Fear set in and they began to think about how this change will affect them.
While you no doubt answered wellness, the reality is that when you look at the typical change programs in a major corporation today, Band-Aids are far more common. But that's hardly surprising given the short-term pressures facing organizations today. Let's reflect on a few examples:
Those in the financial services industry are still struggling to deal with the rash of new regulation post meltdown. Following a spate of high-profile failures, risk management has taken center stage, while in others there is a hurried review of operating procedures in far-flung corners of the corporation.
In virtually all industries, others are trying to respond to hemorrhaging sales statistics. Customers are no longer happy to keep quiet when they get a bad service experience - they tell their friends and followers via Facebook and Twitter. Customer churn is rampant.
Or is it increased competitive pressures? More and more new entrants are turning up to challenge and disrupt the incumbent business models of many established firms. They don't have the baggage of high-cost business models and 12 layers of management.
Chris and I recently published a report describing how to build risk and compliance principles into your company’s corporate culture. As we worked to finalize, edit, and publish the report, a flurry of new corporate scandals emerged, all related to this topic.
Here are just a few of them:
Wal-Mart executives accused of trying to hush up bribery cases in Mexico (article here).
A whistleblower accuses Infosys of engaging in a systematic practice of visa fraud (article here).
A former Goldman Sachs employee writes an op-ed for the New York Times blasting the company’s ethics (article here).
JP Morgan suffers a $2 billion trading loss due to “poorly monitored” trades (article here).
The only way your company will differentiate based on customer experience is if the culture of your organization aligns closely with the brand promise to customers. Zappos CEO Tony Hsieh puts it in his blog post entitled “Your Culture Is Your Brand”: “Advertising can only get your brand so far . . . So what’s a company to do if you can’t just buy your way into building the brand you want? In a word: culture. At Zappos, our belief is that if you get the culture right, most of the other stuff — like great customer service, or building a great long-term brand, or passionate employees and customers — will happen naturally on its own.”
When Forrester looks at building a customer-focused culture, we believe firms need some precursors in place, such as a clear strategy and vision, metrics that reflect customer perceptions, and governance mechanisms that set standards and hold people accountable for changes.
Once those are in place, rewards systems are one powerful lever to keep employees focused on what’s important. My colleague Belle Bocal and I identified nine ways that companies use reward systems to build a customer-centric culture.
Celebrate Target Behavior
Many companies make the mistake of trying to tie variable compensation (e.g., bonuses) to customer experience metrics too early. What many firms have learned is that the more informal recognition programs can be even more powerful at moving culture than the compensation metrics.
Think of a medieval fortress: It was originally used for a small army, it has walls nine meters thick, and it’s surrounded by buildings hundreds of years old. Upon entering, you are confronted with the concept of eternity.
This fortress is located in the smallest state on earth — though it is also perhaps the best-known state in the world. The business housed within the fortress is what many might classify as a SME but with with complexity of a large enterprise, holy but busy, centralized but truly global — its work spans hundreds of countries with hundreds of currencies and hundreds of languages — and it serves very special and demanding clients.
Have a clue yet of where we are?
Zoom on Italy, then zoom on Rome, then zoom on Vatican City, and you can’t miss the round tower (Torrione Sisto V) where the Vatican Bank, or Istituto per le Opere di Religione (IOR ), is located. You won’t be allowed in if you are not a client, an employee, or part of a religious congregation. Change comes hard to institutions this steeped in tradition. To give you a clue, IOR’s previous managing director spent his entire career at IOR — 60 years — and retired at the age of 80. We all know it’s the soft and cultural aspects of transformation that are the hardest part for any organization.
Nevertheless, IOR has been going through a major change since 2008, working to replace its legacy IT system with a modern BT one. The new BT system brings more flexibility for the business, richer business functionality, and greater integration and development capabilities. Enabling fast change is the key driver for IOR’s IT transformation program from IT into BT.