Many experts make technology so complicated that hardly anybody understands the meaning of their solutions as related to real life problems. The indifference of these information officers to their audience and their occasional bouts of egotism may well be the main reason for miscommunications with their company's general management. Often Boardrooms are inflicted with IT proposals that are unreadable and with text containing confusing abbreviations.
Certainly in Europe, most Board Members have neither the technological education nor the hands-on experience, and as a result not the insight, to make clear judgements about the strategic importance of technology proposals. Marketing managers tend to have the same problem. There is a similarity then, to a Bible story about the Tower of Babel in which God punished people for arrogantly trying to build a tower to heaven. In response, God created so many languages that they were no longer able to understand each other and consequently had to terminate the project.
A bank tried to solve its ongoing problem of poor communication with customers. It had changed policy a few times and made sizeable, if not somewhat incomprehensible, switches in priorities between customer groups in wholesale and retail banking. They compensated for the ensuing lack of trust by introducing an aggressive advertising campaign and a CRM - sales force automation - system. The latter action was adopted on advice of the eBusiness department. Management convinced the Board that the plan would improve customer relations but the result was little more than a sales promotion and, in combination with the advertising campaign, caused resistance and significant damage. Customer Relations has to start "between the ears"; it is a mindset and IT cannot change much until the customer is really at the center.
Everyone who has a network with top management will recognize similar situations. Through this type of miscommunication, with bad briefings, marketing managers do not get the right tools to communicate with their customers and IT managers are frustrated because they do not feel appreciated for their work. The result according to Hasso Plattner, CEO of SAP, is that in the year 2000 alone, $33 billion was overspent on IT and many of the solutions in CRM did not meet expectations.
The Pentagon is the symbol for controlled strategic armed forces; coincidentally, this symbol can also be used to show that IT and Telecom solutions have real strategic impact. At least in my many empirical contacts with different experts none of them did ever mention other basis solutions that didn't fit with the dimensions of the Pentagons. Thus it seem worth wile to elaborate these dimensions in both areas. Using Pentagon models, we have a tool to clarify communication between experts and management and to ease decision-making in the Boardroom. First -- IT.
The five IT dimensions are:
The Supply Chain consists of solutions like procurement, ePlatforms (marketplaces or exchanges) and EDI. It links suppliers with their customers. EDI facilitates data exchange point to point, e.g. between a manufacturer and a customer. Procurement does the same but with advanced technology and services. Exchanges or marketplaces are: (1) privately held trading platforms standardized on one technology (e.g. Rosetta.net); or (2) external public trading platforms like Transora (food), Elemica (chemicals) and Covisint (Cars). EDI and procurement connect each customer separately with the company. EDI is much more costly than marketplaces because it requires different interfaces for each supplier with relatively high maintenance costs. Marketplaces and exchanges force all participants to use the same technology for communication and transactions.
Portals are the connection to market communities. There are different communities but the main models are vertical communities with a clear definition of the customers, like CNET for IT professionals. Horizontal communities have a clearly defined information role or product range like YAHOO, EBAY and AMAZON. Finally, corporate portals provide a direct connection between customers, employees of the firm and partners. Portal solutions, e.g. from BROADVISION, facilitate self-service resulting in lower distribution costs and (hopefully) higher customer satisfaction, much as pioneering CISCO achieved early on.
CRM is the abbreviation for Customer Relation Management. In this area, most investments resulted in disappointments over the last few years. The main reason is that management in the past - as we have seen in the case - often thought that these systems could turn their "push marketing" and customer-unfriendly attitude into a customer-driven organization. Before IT could help, they had to change and had to create another mindset. Secondly, most CRM solutions are, as stated in the case, still push marketing or "sales force automation" tools that are already passť in the real world. More advanced pull marketing, e.g. from EPIPHANY, now provides valuable analytical CRM tools to facilitate pull marketing or personalized relation management.
Knowledge Management is one of the most misused concepts in global business. The problem is that where everybody seems to understand that knowledge is a far more important asset than buildings, stocks or debtors, almost no one can translate this into practical implementation. In the past, ERP systems forced thinking into functional silos such as marketing, finance, or production but stimulated no integrated action. Nevertheless, ERP systems remain an important source of knowledge. A necessary next step is determining knowledge components like workflow, content, collaboration, retrieval, (e-) learning and MIS and relating them step by step to each other. Common learning should be the driver for knowledge management. It is a precondition that we demolish cooperation-barriers (customer driven) between BUs and "departments" like HR. This should have also a major effect on ROI.*
Many Managers frown or raise an eyebrow after hearing that integration is also a strategic IT solution, but there is an easy explanation. A global company that is constantly realizing acquisitions may unavoidably buy systems that are not compatible, and the question is how, or even if, these disparate systems should be harmonized. Suppliers, customers and other stakeholders might also use completely different systems but nevertheless they have to be able to communicate with each other. Specialists like TIBCO, IBM, WEBMETHODS and BEA are pioneers in the integration of entirely different systems. They have demonstrated that it is too costly and time consuming to harmonize IT. Middle ware solutions, layers over existing systems with adapters, connect everybody. A vision on integration is no luxury; it is vital in order to avoid excessive costs.
These are the five strategic IT solutions and each fosters very transparent decision-making. Top management and IT experts have to communicate about these five topics and to understand what the strategic dimensions are supposed to be -- what IT can do for them.
This pentagon can also be related in an interesting way to the Telecom pentagon, making it possible then to relate service to communication infrastructure. When people understand how to implement this, it will bring them greater and clearly demonstrable efficiencies.
Again, many top managers frown when confronted with the importance of the relation between Telecom and IT as a strategic issue. "IT is perhaps a corporate strategic issue, but Telecom is certainly something that only matters for technicians" - one can hear them arguing. But everybody can understand that when text, data, video and voice go through the same system, cost-savings could be enormous. Wrong choices mostly mean that global communication is too complex, which could be almost sure very damaging in the commercial contacts with customers and partners. Therefore the choice of a communication network dedicated to an industry is very important, while the solutions are different, as we will see.
The five telecom dimensions are:
From a strategic standpoint, it is of no interest which system is used as long as it is the best solution in these five categories. The First Mile is about the way the organization is connected with the rest of the world. The Middle Mile bridges the main distance between the messenger and the recipient and vice versa. The Last Mile is the entry to the customer and finally, there is an increasing need for multi-channel communication with a high-speed Network (ethernet), using a variety of IP Appliances to communicate with the customer.
The First/ Last Mile and the Communication Network are strongly dependent on practices in vertical markets. Using a self-service portal, for example, creates a totally different communication pattern than that of a call center. Personal selling offline has different needs than online selling. But sometimes vertical markets shape even the Middle Mile. Shipping companies for example cannot have ships at sea without satellites to communicate with their offices and business partners, but on land they are able to use cables.
The hotel business is still very fragmented certainly in Europe. Phone, fax, mail and video costs are often very high because they are going through different networks and require a large labor force. One integrated system (that would include partners) can be used with different appliances, like mobile and email. On behalf of their customers and to be more efficient, hotel headquarters have to consider an integrated network and to offer fast access (real time?). Thinking about such a connection starts with thinking about the first mile. But the real opportunities and problems appear after that.
Communication with 15 receivers or more (hotels) at the same time [= midle mile] is cheaper by satellite than by cable (= middle mile). Hotel chains are launching massive portal communities for customer self-service such as bookings and changes of travel programs; they are enforcing procurement with their suppliers through their own facilities. Together with yield management [management info systems], other IT knowledge management systems and especially with entertainment/ video (all last mile) it demands bandwidth. The right solution will make it clear that only an integrated approach of telecom and IT possibilities will provide a cost efficient hotel business approach; it is a real strategic issue.
What fits for hotels fits also for global companies! Specific "pentagon" requirements of the vertical market or ecosystem in which the company is operating have to be dominant. Problem is mostly not the technical solution but management discipline. For example in case that a company is using one integrated global network, use of networks from outsiders should be avoided much as possible, otherwise there is no cost reduction and even more important only limited use of the own knowledge system. If integration is not possible then there should be a more pragmatic solution. Integration is not a holy icon! Without an understanding of the interrelation between telecom and IT connected to the specific vertical market/last mile questions, a company might not able to compete anymore.
To create services a telecom service company has to become a system integrator and has partnerships with service providers that enables the use of adequate IT and visa versa. Cisco, a producer of routers and networks, understood this first. They created many IT internet solutions or workforce optimizations with partners. By selling these solutions to their customers they created a need for integrated networks. Without using the "hard sales" approach, they became the number one in this industry, globally. "Runner-up" companies like 3COM, Nortel or Alcatel often have difficulty competing unless they have a cheaper price quality proposition.
With integrated telecom and IT services, the need for content management and distribution becomes apparent. All services are connected to the content of customers, suppliers or partners. Thinking about communication for a vertical market requires the integration of telecom, IT and content management in one brain box.
The Communication Brain Box:
Why do most providers need a Content Management System? While many design service efforts are outsourced, most content is generated in-house. That requires a company to engage a large number of contributors to participate consistently. The organization becomes an "accidental publisher," but with neither the knowledge nor the professional publishing background to deal with the ever-increasing volume of content. Suddenly, a content management system seems like an excellent idea and system integrators and/or service providers have to understand that need and make content accessible for everybody who needs it.
The need for Content Management has really soared in past years. Information platforms like Science.direct (Reed Elsevier) made it clear that information can be obtained from everywhere in the "science, technology and medical publishing industry" or STM market. A company like VERITY offers a portal for knowledge management. The company has a search engine to find content and to storage it systematically. Data and information have to be transformed into knowledge. It gets a meaning, but not without the right IT and Telecom solutions. Otherwise it will almost sure never reach the right users.
Finally formatting should be part of content services, print on demand will emerge and security will often be an important issue. Web services will make it possible for applications to communicate with each other without human interference. Content will be distributed through all the dimensions of the pentagons and should therefore related to modern technology. We realize that we are in the center of the dynamics of the communication revolution.
All corporate strategists must come to understand how IT, telecom and content management fit together. They have to insist that consultants or suppliers give them an understandable explanation about how their solutions are positioned in the brainbox. It is key that people be ready for a new approach. Change is more about governance than technology, but the latter should always facilitate it .