CIOs have a critical role to play in giving their business a competitive edge.
Pressure to Compete
As the pace of business increases so does the pressure to compete. CIOs have a critical role to play in giving the business a competitive edge. As the company’s executive technology and business process enabler, the CIO is in a unique position to drive initiatives that contribute directly to enhancing competitiveness.
As CIO, what actions are you taking to improve organizational competitiveness? You could apply resources into your internal processes to gain better insight. You could build systems to collect more information about your target customers’ interests. Or you could focus on streamlining key processes so the organization runs more efficiently.
Each of these strategies has merit. The success of your efforts―whether or not your organization’s initiatives result in a demonstrable improvement in the company’s competitive edge―comes from proper alignment with your company’s strategic business goals.
Microsoft IT is constantly looking for opportunities to streamline processes and to analyze information in ways that give the company a competitive advantage. Three such opportunities are presented on the right.
The intent of business architecture is to drive optimization and investment recommendations for Microsoft IT and business executives. Business architecture enables business leaders and their teams to realize value by creating strategic business designs, and then by aligning these business designs to the company’s investment plans and strategies.
For Microsoft IT, business architecture has delivered real value as we enable a real-time enterprise. Here are four ways business architecture has become a strategic instrument for change:
- Improving the strategy and business planning process by standardizing roadmaps and integrating with the planning process across the organization.
- Improving integration of short-term and long-term planning processes using standards and detailed business architecture processes.
- Improving strategy development and business operations analysis capabilities across Microsoft IT and supporting 32 business segments.
- Driving cross-company collaboration by developing an integrated business architecture community and training program.
There are seven views that make up a business design: Strategy, Capabilities, Services, Processes, People, Information, and Technology. As CIO, you must think about the business through all of those views―that is the business design. Analyzing these views drives recommendations for alignment, strategic investments, and the development of multi-year investment plans and roadmaps.
Microsoft IT Transformation
Before developing an integrated strategy map and balanced scorecard, Microsoft IT was comprised of 11 different organizations, each with its own discrete, independent strategy. These autonomous groups made it difficult to understand what the end-to-end IT organization looked like from a capability perspective. Furthermore, Microsoft IT had no detailed business architecture design to map processes and to identify how they would work interdependently to deliver a quality experience to business customers.
Over the past three years, Microsoft IT has transformed how it does the business of IT. The organization’s business architecture map and its seven different views are at the core of the organization’s transformation, helping drive business insights and ensuring that its processes align to the company’s strategic objectives.
The benefits of using these views to gain insight into―and improve upon―a company’s operations are clear:
Microsoft IT was able to consolidate 156 goals across 11 discreet organizations’ strategies down to a single strategy map that contains 20 objectives for the organization as a whole.
Before Microsoft IT built its business architecture map, there was no clear picture of the organization’s end-to-end capabilities. With a clear view of the organization’s capabilities, Microsoft IT was able to simplify its operations with a 55 percent reduction in joint decision-making.
Microsoft IT was able to develop core standards around its services―and reduced 671 discrete services into 17 service catalog items.
Microsoft IT was able to move from 150 tasks in its IT life cycle (ITLC) that described approximately 55 percent of what the organization did, to 34 core process areas that articulate 100 percent of what it does with the business.
Microsoft IT clarified what its roles were from a service perspective, identified gaps in the roles it had in the organization to support its transformation efforts. And as a result, the organization defined a new relationship management role to meet the needs of its business partners.
Information and Technology
Before developing the business architecture map, Microsoft IT had no documented information model or single repository of information for its applications and platforms. Now the organization has standardized on a master repository and a single information model for Microsoft.
Nowhere is there a better opportunity for a company to learn about the interests of its customers than through its website. However, gaining insights from how customers use your website (the “clickstream”) requires heavy lifting on the back end. As CIO, how do you transform your corporate website into a powerful sales and marketing tool that helps the business gain a competitive edge? If your chief marketing officer (CMO) wants seasonal offers to tie into the website with your partners, can you capture and analyze how customers are using your website, and then use that information to display offers that will interest them?
The microsoft.com site is one of the busiest in the world, attracting more than 228 million unique visitors each day. The challenge for Microsoft IT has been to design an infrastructure that can capture the massive amounts of input, and then to measure and analyze it in a way that provides insight into customers’ interests for the sales and marketing teams.
Microsoft IT has developed an end-to-end measurement and tracking system for microsoft.com, which reflects its adoption of business process management as a core philosophy and an organizational concept within the organization. This system enables Microsoft IT to determine the capabilities to consolidate―and to determine which are critical for driving business outcomes.
Some of the ways in which the new system helps drive competitive edge for the company’s commercial and consumer segments include:
By centralizing the management of all its commercial account data into a centralized data management environment, Microsoft IT can perform wholesale predictive analytics against that data. As a result, the targeting for all product launches is driven by predictive analytics using a whole set of early adopter models, enabling the business to predict which customers are most likely to adopt a first release of a product. Furthermore, all commercial marketing campaigns have a tracking capability, which enables the business to determine actual cost on a per-opportunity basis.
Microsoft IT has made a considerable investment in Big Data analytics. Microsoft IT’s anonymous data store currently holds information from more than a billion cookies, whose data is used to create different segments of consumer preferences based on unique combinations of behaviors and external data. The segments provide profiles against particular behaviors. These segments are being tested by the microsoft.com sales and marketing team to improve the efficacy of their campaigns.
Remember that a business can't talk about monetizing its clickstreams with any accuracy until it can measure them. Microsoft IT’s measurement and tracking system is based on a standardized measurement approach that utilizes Big Data and generates critical information such as average order value and revenue per customer. These are precisely the kind of details that help the business maintain its competitive edge in the marketplace.
Using Big Data to Track Consumer Interest
Providing the sales and marketing team insights to which visitors will respond to offers.
Microsoft’s sales and marketing team wanted to understand the behaviors of anonymous visitors to www.micosoft.com―and their interest and likely response to a Windows online campaign for Windows Phone 8. Microsoft IT developed a statistical model from aggregated cookie data, which is fed into Microsoft HDInsight to produce the results. The model produces a list of cookies that are more likely to visit a Windows Phone 8 website. Microsoft IT is also currently developing models that indicate a customer’s propensity to visit websites for other specific products such as Surface.
Using the cookies, the team was able to develop scoring groups to segment the visitors to the company website. The scoring groups reflect a combination of factors that were tracked. The goal was to identify the scoring groups and to plot them on a continuum of response and no response to the online campaign. The model would have to handle over 1 billion identifiers each with multiple transactions.
With a random scoring of visitors to the website, the team could expect the first 10 percent of total visitors to produce 10 percent of the total responses. However, what the team found after analysis was that the first scoring group (#1 on the chart)―which comprised less than 1 percent of the total visitors―produced 16 percent of the total responses (blue line shows cumulative distribution hits). Extending this further, the top 16 percent of total visitors produced 80 percent of the cumulative hits.
The modeling provides the sales and marketing team insight into which visitors are most likely to respond to online campaign offers.
One means by which CIOs can enable business advantage is by optimizing processes throughout the enterprise. For multi-national corporations, regional sales processes can vary significantly in their workflows and their relative efficiencies. This presents a good opportunity for optimization, but where should businesses start? What in particular indicates a need for optimization?
Microsoft IT recognized that the rhythm of business process used to run the company’s enterprise business in Japan was cumbersome. The manual sales process affected a number of roles, including sales people, managers, and partners. Different managers used their own versions of templates, spreadsheets, and other tracking tools. Additionally, a heavy reliance on paper reports meant that business leaders and partners were not able to see joint pipeline reviews or other dynamic information during weekly business review meetings. Instead, stacks of printouts had become the business norm.
The time required to run just the review process each year equaled approximately eight full-time employees―or roughly U.S. $2 million. In fact, the process was so inefficient and paper-dependent that lining up the total materials generated during one year, end to end, would stand taller than Mt. Fuji.
A Mountain of Paper
When Microsoft IT completed its review of the company’s enterprise business in Japan, it discovered that the work process was surprisingly inefficient and paper-dependent. If the total materials generated during one year were stood end-to-end, they would exceed the height of Mt Fuji.
Lean Six-Sigma Techniques
Microsoft IT reviewed the required scorecard items from the local business, and then simplified the rhythm of business process by standardizing templates and automating processes through Microsoft SharePoint's business intelligence (BI) technologies.
Using the "Lean" Six-Sigma technique (a time in motion study) to walk through Japan’s manual process, Microsoft IT gathered sales managers, partner account managers, and sales executives in a workshop to document the current process used to manage pipeline, forecasting, and license renewals. The team then mapped out the end-to-end process and flagged where data is first used, who puts it into what system, and who takes the output and does what with it. With this information, Microsoft IT was able to reduce waste by removing any duplicate processes and by automating the majority of what used to be manual steps.
The new system includes mobile solutions that give employees access to real-time performance data. Employees can now perform quick queries through a standard BI interface, which has freed them from bringing reams of paper to each review session.
CIOs looking to enhance their company’s competitive advantage through process optimization should consider the following:
Automated versus manual reviews
How do you review your business? Do people come to you with a spreadsheet, or do you use an online dashboard powered by BI?
Selling time versus non-selling time
As a CIO, do you know how many sellers you have and what percent of time they spend with customers and partners versus doing internal administrative work? For the non-selling time, what's the key driver? Performance management of your sales force and how you run the business can result in copious non-selling, time-based responsibilities.
How do your systems tie in end to end? If you have marketing, IT, sales, fulfillment, and customer service operating in their own silos with their own event tracking solutions, leads that come in from a planned event might not tie directly into the next item in the sales pipeline. How are you able to measure performance? If you have 1 million leads that come into the pipeline, do you know the yield at each phase of the sales cycle?