Information Age: News, analysis & insight for IT & business leaders

Times - and priorities - are changing for IT executives. When analyst house Gartner quizzed a group of CIOs in 2005 about the demands being placed on them by their businesses, the results were surprising: the top priority was for IT to enable business growth. To put that in context, the same survey carried out a year earlier revealed that enabling business growth was ranked down in 18th place, beneath a list of conservative and precautionary measures.

After years of focusing on taking costs out of operations, the shift in priorities can be unsettling for some: "IT organisations are not used to enabling growth," says Gartner's Ed Thompson. "This puts them in danger of becoming irrelevant. In many cases, it's easier for a business to just hire more sales staff than to find a technology to grow business."

Such stark warnings should be a wake-up call for IT executives. But for many, delivering on the target of enabling business growth can be achieved by focusing on core technologies already in place. For example, customer interactions can be improved - something that customer relationship management (CRM) software has long promised to be able to deliver.

Your call is important to us

The cost-cutting agenda that many businesses adopted during the early, leaner years of this decade demanded that technology projects deliver an easily quantifiable return on investment. This meant that CRM implementations aimed at empowering the salesforce and streamlining sales processes were less successful than those which focused on reducing call centre costs and improving customer service, says Greg Gianforte, CEO and founder of hosted CRM provider RightNow Technologies. "Selling something to someone who has a true need for it is the best kind of customer service you can provide," says Gianforte.

Businesses are well versed in the marketing line coming from CRM vendors about cross-sell and up-sell opportunities; it is axiomatic that revenues can be grown by increasing sales. But too often the mantra of 'up-sell and cross-sell' overwhelms the desire to deliver something that the customer wants. Businesses have used technology to automate a continuously repeated message that reassures customers that "their call is important", while the poor customer is left waiting 20 minutes for the call to be answered.

To increase the likelihood that customers can be persuaded to spend additional money, businesses need to truly understand what that customer wants. That requires a deep understanding of the customer. "When CRM is implemented, you need to be able to do analysis to the nth degree," explains Paul Smithman, customer marketing director at enterprise IT adviser Diagonal Consulting. "Building the relationship by finding out who the customer is and what products would be appropriate for them is particularly key with cross selling."

Having accurate, accessible data available for analysis is essential for deriving maximum value from CRM projects and creating opportunities for sales growth. The crucial role played by data in technology projects that serve sales and marketing sees CRM, business intelligence and data integration vendors competing to provide businesses with the fabled 'single view of the customer'. Indeed, in this context, the distinctions between these functions seem to be eroding.

"It caused an uproar when I first wrote it, but analytical CRM and business intelligence are essentially the same thing," says Jill Dyche, of business intelligence consultants Baseline. "And now you can substitute CRM for data warehousing."

Whether businesses build a comprehensive central repository of customer data around a CRM platform, a business intelligence tool, through integrating existing data stores or even implementing a service-oriented architecture that takes an agnostic approach to where data is stored, the benefits of creating a single, holistic vision of the customer are clear: better opportunities to drive up value from interactions.

Acquire purpose

Customer analysis is now helping to drive business growth to such a degree that some companies, such as Internet giant Yahoo!, now place such a value on the analysis function that it is given equal billing within the company as marketing and sales (see Applied IT section).

This kind of analysis can help sales and marketing teams to enhance their ability to track the success of campaigns, and to evaluate what kind of people might become customers and what kind of customers will be profitable.

These methods are being employed by pensions giant Standard Life. It used analytics tools from SPSS to target customers that were likely to be receptive to a direct marketing campaign. The model was built by analysing customer behaviour within Standard Life's bank subsidiary where the products were first on sale.

This approach let the marketing department save resources on sending information to people who were unlikely to respond and unlikely to bring profit if they did, and focus instead on more promising prospects. "Our clients that use a combination of models that predict response probability and models that predict profitability are the ones who get the most out of our tools," says Colin Shearer, VP of customer analytics at BI and statistical tool vendor SPSS.

This example also demonstrates an increasing understanding of the benefits of classifying customers: Not all customers are of equal value. Some must be cherished, while others can be quietly dropped.

The idea of cherry-picking customers is already established in industries such as telecommunications where customer churn is rife. Keeping hold of the best - most lucrative - customers is paramount. Banks are also waking up to the need to control churn, as switching banks has become increasingly hassle-free for customers.

At UK-based building society Nationwide the need to reduce churn was first identified in 2001. Working with Portrait Software (formerly the AIT Group), it developed a single page view of its customers, helping to establish high-value customers and improving its ability to meet their needs. "It was a long journey," says David Rigney, divisional director of central retail operations at Nationwide. Data cleansing alone took four years, and is still ongoing.

But the results have enabled Nationwide to improve its customer retention rates. It also found that this understanding of customers helped identify opportunities for further sales.

Other people's data

Improving the use of data collected within the organisation has its limits - so some forward-looking businesses are taking advantage of the wealth of information available outside of the corporate walls.

One trend is the growing use of information services that support marketing operations by associating economic and geographic statistics to existing marketing records. The use of multiple data sources can help fine-tune customer profiling efforts. "We don't tell our customers how to interact with their customers," says Ian Lovett, joint managing director of one such information service, Blue Sheep. "We use the Oxford Economic Forecasting model, the same as the Treasury uses, to assess our client's customers, looking at which accounts they should treasure, and which they should discard as too risky."

Although these services usually pitch to marketing departments, CIOs seeking to improve the commercial knowledge base need to understand how the data can augment internal efforts.

Search engines are another third-party source of customer information. In 2004 spending on search engine marketing across the globe reached $4.1 billion, according to the Search Engine Marketing Organization. Just as businesses can analyse the behaviour of visitors to their own websites to find out which marketing messages drive sales, companies can also employ the analytical capabilities of search engines to model the search behaviour of their typical customers.

Australian search engine company Mooter has developed technology that builds not just a search history for each user but also a cognitive profile of that user based on their response times and click habits. With search engine analysis technologies such as this advancing the ability to profile potential customers, the Internet will prove a vital market test bed that can inform both online and offline sales and marketing strategies.

This trend presents the opportunity for IT departments to take a leading role in business development that would perhaps not have been previously open. It is time to prove that IT can earn its keep.