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IoT and customer intimacy: They're related

Potentially the biggest opportunity and/or theme in the definition and use of the internet of things will be in the effort to increase supplier intimacy with the customer. Have we considered what this might mean for the average IT organization? It’s safe to assume that you’ll need to make a change to business as usual and put in place solutions and processes that will allow you to scale operations quickly, efficiently and with a high level of resilience.

How do IoT and customer intimacy relate?

Let’s start by going back just a few years and considering some of the more famous implementations on what most would call modern IoT. We’ll start with Nest — the humble if not innovative new thermostat for the home. Does anyone wonder why Google bought Nest? I’m relatively certain it wasn’t because it had a new interest in managing your home’s environmental settings. I’m pretty sure Google bought Nest so that it could get into our homes. In other words, Nest was a new way to gain new and better “customer intimacy.” Nest is but one example of thousands from the connected car in our garages to the smart refrigerator in our kitchens to the health monitors on our wrists. The more the vendor knows about us, the better its link to us, the easier it is to sell to us.

Should greater customer intimacy scare my IT team?

The idea of greater customer intimacy should be appreciated by anyone in the business of selling something. Whether you sell a service or a product, the more you know your customer, the better it is for your business. At issue isn’t the question of whether you should want greater intimacy, but rather what does that mean to your IT team? How will demands on your IT organization likely change because of a much greater external focus?

Today, the clear majority of IT organizations spend upwards of 90% of their resources on supporting the “internal” customer. Unless you’re a company like Boeing, you likely have an exponentially larger external customer base than internal — so why the disparity in support? Let’s think about a few companies who make a living providing a digital experience to their external customer base as their priority versus the internal customer. Facebook, eBay and Amazon might quickly come to mind. However, you could also add Ford, Nordstrom, Starbucks and others into that group as well. The last three companies I mentioned aren’t as digitized as the first three, but the trend is there. Each of these companies is spending considerable resources enabling greater levels of connection or intimacy with the customer. Is that a tsunami I see coming?

The disparity between current IT capabilities and what’s necessary

The average IT budget today has a roughly 95% to 5% split of spend for internal customers versus external. If your current IT budget is 95% plus allocated for keeping ERP customers happy, PCs working and networks up, how will you accommodate an exponentially larger customer base that demand a consumer experience? Consider the numbers: eBay has around 13,000 employees, yet it has infrastructure to digitally support around 10,000 times that number. eBay is still building its customer intimacy. It’s nowhere near where Facebook is and, yet, its technology footprint for the external customer dwarfs the IT footprint for employees. Putting this into a little bit more perspective, if you have 1,000 employees that require $50 million in IT support yearly, what do you expect the IT budget to be when you must support 10 million external customers? I’m not assuming it’s one to one, but even at 1% per external customer versus internal customer, you’re looking at a 100x increase in IT demand. Can you afford to come up with $5 billion for IT? There’s no way your company can respond successfully if all you’re planning to do is attempt to scale off what you’re already doing.

Not every business will be impacted the same way

While your business may not have the customer numbers illustrated above and it might never need to become quite as digitized as an eBay or PayPal, there can be little doubt you will need to dramatically change over the next five years in order to remain competitive. Keeping in mind the idea that a dramatic change in the amount of IT you deliver and support will be required, what can you do now to prepare? I can say with certainty, you won’t be able to prepare by throwing more bodies and hardware at the problem.

Speed, scale, efficiency and resiliency

Most IT organizations today are still following some form of stepped or waterfall-like process for release to production of any application changes, updates and new releases. These stepped processes are very human-interrupt-centric, which causes delays and increases the potential for the introduction of problems — and this also applies to your infrastructure platforms. If you can’t treat your infrastructure, all your infrastructure (public cloud, private, bare metal or other) as one large deployment platform, you’re never going to be able to deploy quickly with confidence. Remember, the external customer will be much less forgiving than the employee customer. To satisfy the external customer, you’re going to have to go from quarterly updates to weekly or even hourly. To address rapid growth or the release of new services or products, you’ll need to be able to deploy new capacity efficiently, quickly and securely with high confidence and, again, you can’t do that by throwing more hardware and bodies at your existing model.

Automation and repeatability at scale are key

Building flexibility into your usage models for infrastructure will help solve many of the issues associated with lock-in. While it may seem that fixating on one service provider is the best answer from an efficiency standpoint, keep in mind that at no time in history has a company ever thought, “one supplier is a great idea,” and a buyer has never said, “monopolies are great.” Using a platform approach that provides you flexibility for the developer can incorporate best practices and DevOps process while allowing you to deploy consistently in a very secure manner on any cloud or infrastructure should be a serious consideration.

The future is bright for the IT organization that can help their business scale with all the requirements outlined above, but at a fraction of the cost per watt of compute or per customer, depending on how you choose to measure it.

All IoT Agenda network contributors are responsible for the content and accuracy of their posts. Opinions are of the writers and do not necessarily convey the thoughts of IoT Agenda.

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