Richard Snow's Analyst Perspectives

IBM’s Smarter Commerce Hits Most of the Right Notes

Posted by Ventana Research on Mar 24, 2011 7:35:53 AM

According to IBM everything now has to be “smart,” and its latest announcement heralding smarter commerce addresses customer-related activities. I find it interesting, as I have been researching for some time about the need for a smarter agent desktop and smarter Web self-service. My perspective, derived from observations in my research, is that companies need to focus on effectiveness in providing positive customer experiences rather than today’s almost exclusive focus on efficiency in customer service operations.

IBM and I agree on at least a couple of things: Customers are changing, and companies have to change also or run the risk of losing them. In particular customers are changing the way they communicate. They are less interested in phoning companies, although my research into the use of technology in contact centers shows we still do call in (perhaps when the other means of resolving issues fail). Today’s preferred channels are e-mail, text messaging, chat and social media, and you need to support them all. Consumers also like to do these activities on the move, and smartphones and tablet computers now provide mobile access to these channels; many also would like to do business through a mobile app, for example, to carry out online banking. Keep in mind also that people might not bother contacting you and instead will use social media to talk directly to other customers of yours, bypassing all those processes you put in place to interact with them and perhaps airing grievances to the whole world. And with more information than ever at their fingertips, they are less tolerant of poor quality and more prone to defecting to the competition if you fail on product, service or price.

To keep up, companies need several things: deeper insights into their customers’ preferences and behavior; support for more channels of communication; consistency of information across channels; an optimized customer value chain from the sourcing of products through marketing, sales and customer service; and personalized customer-related activities (such as individualized marketing campaigns). In short, they need to ensure that the whole customer life cycle is placed within the context of the customer experience and is consistent with the expected business outcomes.

At this point my view begins to diverge from the IBM smart commerce offerings. IBM is pushing consulting and has created a set of offerings around innovation and business value, market and customer management, and operating and organizational models. All of these make sense. When it comes to applications and technology, I have questions. Underneath the covers IBM depends on integration of a number of products that it has either developed in-house or acquired, which include Sterling Commerce, WebSphere, ILOG for the supply chain, Coremetrics, Unica and some specialist point-of-sale products. While all of these are good applications, my question is whether they combine to provide everything that companies need to support smart commerce. To do that requires analytics in its widest sense and customer-focused and predictive capabilities. IBM of course has Cognos and SPSS to provide analytics; in my view they should have a higher profile in the solution. Also there is no doubt in my mind that the biggest hurdle in the way of smart commerce is customer data. My research into customer information management shows that in most companies their customer data is in disarray. It is held in various transactional systems (ERP, CRM and the like) that are owned by different business groups, and much of it is in formats such as call recordings and text that companies have yet to use effectively. Also much of it is not up-to-date. The result is that companies don’t have a single source of synchronized, high-quality customer data they can use to drive smart commerce. IBM also has master data management capabilities, and I think these also need to feature more prominently in the solution.

Nevertheless this is an exciting announcement from IBM that companies should take a serious look at. It covers many but not all capabilities that companies need to adopt smart commerce. And companies will have to pay particular attention to the customer experience. One consequence of the way consumer behavior is changing is that many consumers aren’t very loyal any more; recent consumer research shows that over half would stop doing business with a company just because of one bad call with a contact center agent. So companies will have to support agents better as they handle customer interactions, and self-service functionality will need to be smarter and more personalized. Social media is not going to go away, so at the very least companies need to know what their customer are saying about them. Truly smart commerce will find ways to address all these challenges.

How smart do you think your company is? Where do you think you need to improve? I would like to hear your views.


Richard Snow – VP & Research Director

Topics: Social Media, Customer Experience, Operational Performance Management (OPM), Analytics, Business Collaboration, Cloud Computing, Business Performance Management (BPM), Call Center, Commerce, Contact Center, Contact Center Analytics, CRM, Sales Performance Management (SPM)

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