Dan Simpson understands business transformation - and the critical role the customer plays in it. Before joining Trustmark, Dan led the Enterprise Technology Group at Physicians Mutual in Omaha, Neb., where he was the driving force behind the company’s business transformation strategy and the Greenfield program, which implemented new customer-centric business processes, service-oriented architecture (SOA), a new enterprise data warehouse, and several key business applications. For these efforts, Dan was recognized as Technology Chief of the Year in 2010 by the Applied Information Management Institute.

I spoke with Dan in preparation for his keynote next week at Forrester's Application Development & Delivery Forum.

Q: What are the business challenges and issues that typically motivate the need for business and IT transformation?

Dan Simpson: Common challenges facing business today include changes in market conditions, consumer behavior, and the regulatory environment as well as increasing competition and complexity. The inability to adapt to these changes drives the need to put new business process and technology foundations in place.

Q: How have you approached business process redesign?

Dan Simpson: The most effective approach is to focus on business process first before diving into systems. Depending on specific situations, I’ve seen great value in taking an approach where processes redesign starts and ends with the customer. This customer-driven approach helps drive customer-friendly decisions and efficiencies.

Q: What is a customer-driven application, and why is that concept important to transformation outcomes?

How should you measure customer experience? Is it even possible to measure something that feels as squishy as customer experience?

As it turns out, you can measure it, you should measure it, and you even have some decent options for measuring it. Your alternatives range from monitoring the real-world interactions your customers have with your firm (like clicks on a site or the length of a call) to asking your customers for their perceptions of those interactions (the real customer experience) to tracking what your customers do as a result of the experience (like making another purchase or recommending you).

At Forrester, we have our own direct measure of customer experience that we’ve been using since 2007: the Customer Experience Index (CxPi). Today we published the results for 2011, which are based on research conducted at the end of 2010.

To help understand those results, let me explain how the CxPi works. We ask more than 7,000 consumers to identify companies they do business with in 13 different industries. We then ask respondents to tell us how well each firm met their needs, how easy the firm was to work with, and how enjoyable it was to work with (questions that correspond to the three levels of the classic customer experience pyramid). Then for all three questions, we calculate each firm’s CxPi score by subtracting the percentage of its customers who reported a bad experience from the percentage who reported a good experience. The overall CxPi is an average of those three results.

Technology vendors are disconnected from their customers. If the problem were simple, such as changing message themes, tech vendors could easily adapt.

When looking at tech vendors, the "problem" is long-standing, entrenched behaviors about how products and solutions go to market. The "problem" includes customers that now want to buy "business outcomes" rather than traditional products. The "problem" includes sales organizations that fail to learn about the customer's business or requirements. The "problem" includes marketing organizations that fail to recognize that while they get to aim the gun, only sales can pull the trigger. Across these three processes, companies are trying to shoot faster, shoot bigger bullets, or even aim at different targets when the real problem is eye-hand coordination - or aligning methods and messages. 

Selling technology requires three processes to align: (1) the customer problem solving process; (2) the vendor selling process; and (3) the marketing processes for communicating solutions. Gaps in these processes will cause finger-pointing within the vendor, raise the average cost of sales, lengthen the sales cycle, increase turnover of sales and marketing employees, confuse customers, etc. Few tech vendors are changing their internal methodologies to align these processes.

How are these gaps in your organization? How is your company addressing these gaps? We'd love to hear your experience!

(Next in this series, Forrester will introduce "portfolio management" as framework to help sales enablement professionals align these silos.)