Senior consultant, IBM Center for Applied Insights
It’s easy to say that information security leaders have it tough. The security landscape is full of conflict, confusion and uncertainty, coming from a number of different directions. Leaders have a lot to handle. If it’s not a rapidly shifting threat, it’s new technology platforms to secure including mobile, cloud and social. Almost every article I see these days is focused on the growing challenges, with titles like the “Eye of the storm”, “Into the cloud, out of the fog” and “Converging waves of pain.”
Today, the IBM Center for Applied Insights releases the results of the 2012 IBM Chief Information Security Officer Assessment. This was our first foray into examining the role of information security leaders, and how they are evolving to meet the challenging landscape. While we understand and appreciate the fact that things are difficult on the technical front, we wanted to focus on the organizational and leadership aspects of information security.
We felt that information security leadership was in the process of undergoing a transformation and wanted to test whether the role was changing based on increasing security challenges and greater attention from business leaders.
We wanted to identify best practices that could be shared across the industry – and understand if organizations were moving toward a more holistic, risk-based approach to information security.
We also wanted to know what roles collaboration, innovation and integration are playing in security organizations.
What we discovered was that only 1 in 4 security leaders have made the shift to being recognized as having strategic impact on their enterprise. Based on a self-assessment of their organizational maturity and their ability to handle a security incident, three different types of leaders emerged.
Influencers (25%) – This group sees their security organizations as progressive, ranking themselves highly in both maturity and preparedness. These security leaders have business influence and authority – a strategic voice in the enterprise.
Protectors (47%) – These security leaders recognize the importance of information security as a strategic priority. However, they lack important measurement insight and the necessary budget authority to fully transform their enterprises’ security approach.
Responders (28%) – This group remains largely in response mode, working to protect the enterprise and comply with regulations and standards but struggling to make strategic headway. They may not yet have the resources or business influence to drive significant change.
We also discovered some significant differences between the groups that show how Influencers have developed their strategic voice. Compared to Responders, Influencers are:
2x more likely to have a dedicated CISO
2.5x more likely to have a security or risk committee
3x more likely to have information security as a board topic
2x more likely to use a standard set of security metrics to track their progress
4x more likely to be focused on improving enterprise-wide communication and collaboration over the next two years
2x more likely to be focused on providing education and security awareness over the next two years
This is just the beginning of our conversation around the role of information security leadership and its place within the enterprise. The full report goes into more detail on the security landscape, the different types of leaders and their characteristics, and a way forward for everyone.
We hear a lot of chatter about a growing IT skills gap, both here in the US and globally. A recent New York Times article provided some statistics that were both frightening and illuminating. Approximately 20 percent of American adults don’t use the Internet at home, work, or school, and don’t own a web-enabled mobile device. While the government has funded a $7 billion effort to expand Internet access across the country, there has been little to no increase in adoption. Employment opportunities are increasingly web-based, but digital literacy rates have remained stagnant.
This gap is not only apparent in the general population, but also in the IT workforce. At the Center for Applied Insights, skills gaps often emerge in our studies as top barriers to success in specific fields. Our 2012 Tech Trends study, which surveyed more than 1200 IT professionals, found that only 1 in 10 organizations has all the skills it needs to be successful. This indicates a major gap – and when we talked to students and educators to get headlights into the future - roughly 75 percent of them report a moderate to major gap in their ability to meet the skill needs of the IT workforce. If the workforce of tomorrow and their teachers are telling us the gap is this big – clearly there’s a problem.
There is also a major skills gap in the security realm. In “Cybersecurity education for the next generation”, we addressed the need for cybersecurity-related academic programs around the world. Less than 60 percent of the students and educators surveyed believe their academic programs address the creation and development of IT security practices for emerging technologies such as Mobile, Cloud, and Social Business.
How can we close it?
Forbes, like the New York Times, wrote an article about the skills gap, emphasizing the disconnect between traditional education institutions and the current, fast-changing job market. Bottom line: institutions aren’t evolving as quickly as they should; only 42 percent of employers believe recent graduates are ready for work. Forbes’ solution? Job seekers must take it upon themselves to develop their own skills, by utilizing online resources. At the same time, companies must invest in comprehensive training programs for their diverse group of new employees, and make job requirements clearer. Noticeably absent was a suggestion for how traditional education institutions can improve. IBM has a tactic to address this. Ad Age featured a story on how IBM, in partnership with its clients, works with academic institutions to design programs that prepare students for real world IT work experience. Examples of these programs include integration with GM at Michigan State, and GlaxoSmithKline at Yale.
At the IBM Center for Applied Insights, we’ve looked at the IT skills gap from both the supply and demand sides. In terms of demand, our Tech Trends paper provides suggestions for IT leaders and practitioners on how to close this gap. For IT leaders, we suggest encouraging skill development across a range of disciplines, designing diverse teams and using social tools to assemble expertise, and extending the skills mission beyond IT, making business leaders smarter consumers of analytics. For practitioners, we suggest concentrating on integrating expertise and deepening specialized skills while broadening knowledge across new areas. Practitioners must combine areas of expertise to deliver more value, strengthen business acumen, and use social tools to solicit and supply expertise.
On the supply side, we discovered that cybersecurity education programs are entering a period of transformation. In order to work in concert with today’s demands, we suggest five key initiatives. (1) Increase awareness of security across the academic community, and produce more graduates from cybersecurity programs. (2) Treat security education as a global issue. (3) Approach security comprehensively, linking technical to non-technical fields. (4) Seek innovative ways to fund labs and pursue real-world projects. (5) Advance a “science of security”.
As technology continues to rapidly transform, skills gaps will continue to emerge. While we won’t try to tackle the 20 percent of non-Internet users in the US population, we in the Tech world have the tools to bridge the gaps in the IT workforce. We must be innovative, adaptable, and forward-thinking. What are the next skills gaps that we’ll explore? Stay tuned for more studies from the Center for Applied Insights that address this skills gap, specifically looking at IT leadership in Africa.
Derek Franks Consultant, IBM Center for Applied Insights
As a former marketer myself, I know that marketing is often marginalized within enterprises, particularly those with strong scientific or development organizations. Marketing is often viewed as being responsible for the “soft stuff” that looks pretty but doesn’t have any real impact on the business. I’m here to tell you that this view is wrong, and if you don’t realize it quickly, your competitors will.
We recently surveyed 362 marketers from around the world, across more than 15 industries, and found that Leading Marketers’ enterprises had 40% greater Revenue growth and twice the Gross Profit growth over the past 3 years when compared to the rest.
What exactly is a Leading Marketer?I’m glad you asked. We identified 2 essential traits of effective marketers: “Effective Engagement” and “Intelligent Investment”. Essentially we defined Leading Marketers as those who had a high level of responsibility forengagingwith customers across channels as well as a sophisticated approach toinvestingmarketing resources.
We then looked at publicly available financial data and found that when we correlated that to our segmentation of leading marketers, a clear trend emerged: Leading Marketers’ enterprises performed better financially.
So how, exactly, do you develop a Leading Marketing organization within your enterprise? Like most things in today’s world the answer is complex but grounded in the principles of Marketing 101. It can be as simple as the 4P’s or as complicated as developing a collaborative relationship with other functional areas within the enterprise. I’ll be blogging more about this topic and other insights from our study over the coming weeks, but get a sneak preview by reading our executive report, How Leading Marketers Outperform: Effective Engagement and Intelligent Investment.
If there is a particular topic you’d like me to talk about, please login and leave me a comment, below.
If your enterprise is working with Big Data, or at least beginning to stick your toe in the water, and you're not thinking about the concept of "signal", you're about to make a big mistake. Identifying the signal is what will enable you to leverage Big Data effectively. And if you don't, you're going to spend a lot of time and money chasing red herrings.
When we rely on data for decision making, what qualifies as a signal and what is merely noise? In and of themselves, data are neither. Data are merely facts. When facts are useful, they serve as signals. When they aren’t useful, data clutter the environment with distracting noise.
For data to be useful, they must:
Address something that matters
Provide an opportunity for action to achieve or maintain a desired state
When any of these qualities are missing, data remain noise.
I like this definition. It fits hand in hand with the concept of Marketing Science that we proposed earlier this year. Insights (aka signal) are only valuable in so far as they drive business outcomes. And if you're developing insights that influence action within your enterprise, you had better make sure that what you're looking at is actually signal.
This is where Big Data is presents challenges. In his post, Few makes the absolutely correct point that data are noisy. And when data increase dramatically in volume, velocity, and variety (aka it gets BIG), that noisiness grows right along with everything else. All of a sudden, it becomes that much harder to correctly identify signal. As Few points out:
Finding a needle in a haystack doesn’t get easier as you’re tossing more and more hay on the pile.
If you listen to some of the discussion around Big Data, you could easily walk away thinking that if you can capture it, all you need to do is run it through some sophisticated analytic software and "boom" you've got new insights.
The problem with this approach is that pesky noise. As you start dealing with huge data sets, it becomes relatively easy to find "statistically significant noise". You may think you're looking at signal, but instead you're just finding random patterns in the noise that happen to look like signal. This is what can happen when analysts are given lots of data and told to go find something.
How do you combat this? Part of it, as Few points out, is having data analysts that have a deep understanding of how to detect signal and the associated challenges that Big Data presents. The other part, is in how you approach data analysis in the first place.
Again, I'll reference our Marketing Science framework and propose that by applying a scientific approach to data collection and analysis, you improve your ability to correctly identify signal. Instead of randomly looking for patterns in the data, by developing hypotheses and then testing and refining them, you're able to focus on signal that (a is more likely to actually be signal and b) will help drive the business forward.
We've seen some really interesting and impactful results internally with the Marketing Science framework. We've developed insights that both drive business outcomes and challenge conventional thinking. I'll be highlighting a few of these examples in future blog posts. In the meantime, I'd love to get your feedback on what challenges you've experienced with identifying signal within Big Data.
Senior Consultant, IBM Center for Applied Insights
Sometimes time and space conspire to create an opportunity that you weren’t expecting. That was the case for me last week. Near where I live, the University of Rhode Island (URI) hosted their third Cybersecurity Symposiumon education and workforce development. Speakers included the entire Rhode Island Congressional delegation, the director of the U.S. Defense Intelligence Agency, the CIO for the U.S. Department of Defense and a number of industry practitioners, including IBM’s VP for Cyber Security Innovation Marisa Viveros. Marisa was the co-author of the paper that we recently published on leading practices for cybersecurity education.
The symposium was open to the public and students, had over 400 attendees, and flew at a fairly high level. There were some excellent takeaways and parallels to IBM’s recent research with respect to cybersecurity skills and education. The Congressional delegation, which included Sen. Whitehouse, Sen. Reed, Rep. Langevin and Rep. Cicilline, each emphasized different areas of the cybersecurity challenge. This included improving public awareness, the national security implications of the rapidly changing cyber threat, the difficulties with law enforcement, and the need to protect our privacy, civil rights and liberties.
Lieutenant General Flynn of the U.S. Defense Intelligence Agency (and URI alum) was a very engaging speaker and talked about the “invisible war” that is currently being waged in cyberspace. He highlighted the profound transition U.S. security is currently going through – caused by population, economic and technology shifts – which require new ways of thinking. To fight this invisible war, he said that for every person currently working in cybersecurity today, we need a staggering twenty-eight more. He also repeatedly talked about the generational issues involved in cybersecurity and that real rules and discipline have yet to emerge on the international stage. He advocated something akin to the “law of the sea”, but for the cyber domain.
The business and industry panel included speakers from Google, IBM, Dell SecureWorks, CVS and Fidelity Investments and was much more open and conversational. They all brought their perspectives – whether providing information security or managing it for their organizations. There was a lot of discussion about how to break into the field of cybersecurity, what skills to have, what courses to take, and career paths. Stephan Somogyi, from Google, talked about the need to educate everyone on digital hygiene and focusing education on the basics of computer science. He said that you have to have a passion for security, it is a calling. If you have that, you can come from any field. Jeff Shilling, from Dell, talked about the incredible need for security technicians, those with hands-on skills. He has enough security managers, what he needs are those that can do the work (he agreed with Lt. Gen. Flynn’s assessment).
A lot of the themes from the day echoed what we recommended through our research. Local and national collaboration was evident with the diversity of speakers and the support from the entire university, the Congressional delegation, the military and industry. The importance of awareness was highlighted over and over. URI is working on innovative ways to provide hands-on experience for students through a low-cost Open Cyber Challenge Platform they are developing. The need for improving non-technical cybersecurity academic programs for business and policy leaders was highlighted in a new study from the Pell Center for International Relations and Public Policy.
This was a very valuable event, and I hope that it continues on an annual basis. Even though it was to raise local awareness and promote URI and its computer science program, it could stand to have increased global participation in the next iteration – which was one of our key findings.
For a summary of our recent research check out and share the Prezi presentation below:
David Jarvis Client Insights, Senior Consultant Center for Applied Insights
In 2012 we saw significant data breaches across multiple industries and governments impacting millions of users. Will 2013 bring more of the same? Is this an uncertain future we will have to live with? Can we accept degraded privacy and security and billions of dollars in lost revenue, damage, reduction in brand value and remediation costs?
Last year, a number of major security themes were part of this uncertainty – cloud, mobile, social media, big data, compliance, advanced persistent threats, physical infrastructure security, and the changing nature of information security leadership. None of these issues are going anywhere. In fact, into 2013 and beyond these issues are only going to become more important and will become the concern of more and more enterprise leaders.
All of these disparate issues come together in a new infographic from IBM. It knits together the pressures CEOs are feeling to deliver transformation with limited resources, the changing role of information security leaders, the threat landscape and the best practices to address that landscape. It connects enterprise priorities with information security practices, achieving innovation while dealing with risk.
In 2012, the IBM Center for Applied Insights released a series of security-related pieces that focused on a number of these important issues. We looked at the changing role of the CISO and other security leaders in our 2012 CISO Assessment. We also published a series of best practices for security leaders through our eight article Security Essentials series. In 2013 we will continue to provide insights on information security.
What does IBM think the future of security will look like? IBM security experts and leaders have developed lists of ideas for 2013 and beyond. Highlights include:
Enterprise security organizations will become more independent and work with the audit committee and risk officers more.
Data scientists will increasingly analyze and correlate security data as well as unstructured business data to reduce the risk of breaches.
Threat data will be shared more readily between the government and private sector, and amongst private sector companies.
Organizations will begin monitoring the information shared on social media back channels to detect threats earlier.
Compliance will remain a strong security driver and will be weighed against the rise of a risk-based approach to security.
Because of data, identity and monitoring technologies, cloud security will go from "mystery and hype" to "secure and move-on".
Mobile devices (the device, network and applications) will be significantly more secure – more than laptops are today.
The type of data collected and inspected to detect advanced threats will increase in variety and volume.
Keeping these ideas, trends and emerging issues in mind, information security leaders must rise to the challenge of creating a future that isn’t like today. By using their best practices to connect with and support enterprise-level goals they can create a better, more secure, future.
To download a copy of the infographic below, click HERE.
In my previous blog post on How Leading Marketers Outperform, I discussed how Leading Marketers develop a system of engagement
that drives customer value at every touch.Today, I’m going to focus on the other side of that equation and dig a
bit deeper into what prevents many marketing organizations from becoming Leading
The first question you might ask is “why doesn’t everybody
just establish a system of engagement?”The short answer is because it’s not easy.A look at the barriers both Leading Marketers
and others face in implementing marketing technology is very telling.
To begin with there are a set of barriers we found that are
common to virtually any technology decision: cost, ROI, and organizational structure.
If we continue looking, the additional barriers for leading marketers are ease of
use and lack of appropriate user skills.Alternatively, we found that some others are more concerned with
alignment/collaboration within the organization – particularly with IT.In many cases, marketers may not even have
ownership of marketing technology decisions.
In short leading marketers are collaborating with IT to implement the technology framework that supports a system of engagement and are focused on issues that enable them to improve
the effectiveness and scale of their activities. The others are
struggling to coordinate effectively with IT and other functional areas within
the enterprise. They aren't at a point yet where ease of use or a lack of user skills could be a barrier.
This leads to the second question, “okay, how do
you collaborate more effectively with other functional areas (especially IT)?”This is complicated, but our data
suggests that Leading Marketers are able to collaborate effectively at least in
part because they’ve established credibility within the organization.
There are lots of ways to establish credibility, but a part
of it is being able to demonstrate the value that you bring to the table.To that end, our study found that 88% of
leading marketers attribute business results to marketing activities. They use a variety of different systems,
ranging from spreadsheets to complex software suites, but the common thread is
that they attribute results regardless of methodology.
And of that 88%, 93% of those leading marketers have a set
process in place for determining which marketing activity receives credit for
the business results.Again, the
specific methodology varies – first touch, last touch, results distributed
across multiple touches – but they have a set process in place.
This measurement allows leading marketers to invest resources intelligently.They know what works and what doesn’t, and this allows them to maximize
the impact they have on the business and focus only on the most effective
activities. This in turn builds credibility with the rest of the enterprise. Marketers can finally speak in the same financial language as the rest of the business.
So in summary, it’s very difficult
to become a leading marketer without measuring the results of marketing
activities.Measurement not only informs
operational spending decisions, but also impacts the role of marketing within
the organization. Leading marketers’ ability to attribute results helps them
not only invest intelligently but also build credibility and the financial justification needed to construct an
enterprise-wide system of engagement.
I'll be back next time with a discussion of the overall characteristics of leading marketers and how they illustrate a road-map forward for marketing organizations. In the meantime, if you have any questions, please feel free to leave a comment!
are bad to do by committee, creating a work of art, cooking dinner, closing a
baseball game – and sometimes committees are a necessity. Security and risk
committees are an essential part of any enterprise’s security and risk
management infrastructure. They are a sign of a mature organization. By
promoting collaboration across the enterprise and making security and the associated
risk discussions an integral part of senior leadership’s responsibilities, the
enterprise can be better protected. Yet, even though the benefits are clear,
not enough enterprises have one.
released last week by the Carnegie Mellon CyLab, looking at privacy and
security governance in the Forbes Global 2000, reported that boards and senior leadership
still are not exercising appropriate governance over the privacy and security
of their digital assets. The study stated that there is still a significant gap
in understanding around the fact that security, privacy and IT risk are all a
part of enterprise risk management.
The study did
note one encouraging sign – that more and more enterprises have
cross-functional privacy/security committees – 70% of 2012 respondents versus
17% in 2008. These committees can act as a bridge to boards and senior leadership
and elevate the discussion around security and risk, potentially closing the
findings line up very nicely with what we recently uncovered as part of our 2012
CISO Assessment. Overall, only
49% of the total sample reported that they had a security or risk committee.
When we delved deeper, 68% of the most mature group of organizations,
Influencers, had a security/risk committee. In comparison, only 26% of the
least confident and mature group, Responders, had one.
interesting was, regardless of the organization’s overall security maturity
level, if they had a security or risk committee they shared similar
characteristics. In general, leaders of the committees tended to be Senior IT
Executives (28%), CISOs (24%) or Senior Business Executives (22%). These
committees met on a fairly regular basis, with 48% meeting quarterly and 27%
security and risk committees also took a comprehensive, enterprise-wide
approach with both business and IT representation. From the business side, the
most represented functions included Compliance (80%), Legal (65%), Business
Executives (64%), Business Operations (64%), and Finance (59%). From the IT
side, IT Executives (91%), IT Operations (72%), Network Operations (60%), and Data
Governance (51%) were all a part of a majority of the committees.
part of the CISO Assessment we looked at the primary objectives of the
security/risk committees. Looking at the chart below we can see that, based on
their top two choices, most committees were primarily focused on developing
enterprise security strategy and developing action plans and recommendations.
So should committees only be focused on strategic policy and governance issues?
Is there more they could be doing?
At IBM, our
risk management team meets quarterly with a top advisory committee, including
senior vice presidents of all the business units, who report directly to the
CEO. These include the leaders of many functional areas including finance,
marketing, technology and others. Each of these executives must understand the
security risks to his or her unit and what controls are in place. Together,
they shape and decide strategy. Security, after all, is intimately tied not
only to their units, but to the future of the enterprise.
all this information, I think that enterprises are using security and risk
committees more and more and they are adopting best practices around the leaders,
members, operations, and goals of those committees. To make the next step:
Make sure your committee has both technical and business leadership representation and make sure it is connected to the highest levels of the enterprise and the board. The committee can be the gateway between the enterprise and the board with respect to information risk management.
Ensure your committee is broad and diverse. Compliance, legal, finance and IT operations representation is expected. Reach further, make sure business unit leaders are involved so new products and services are created in a secure fashion. Include human resources to help with employee education initiatives.
Set up a way to measure the progress of the committee. Using targeted metrics can help focus not only the committee, but the entire security organization for the enterprise. It will provide something to work towards and make it easier to communicate with the board.
Mobile money has progressed by leaps and bounds in the recent years and a lot of innovations are happening globally. The industry is undergoing a lot of changes and ecosystem participants are trying to learn from their successes and failures to innovate further. I have been an avid follower of the various developments happening in the industry. In this post, I will capture my thoughts on key segments of growth/developments which I would expect to happen this year. I believe these segments of growth/developments have the potential to bring further scale and innovation in this industry:
1. Development of ‘App Store’ – I expect that some of the major mobile money service providers may open up their platforms via an Application Programming Interface (APIs) that allows third parties to hook in and innovate. This development has the potential to replicate the success of the ‘Apple Appstore’ by providing an incentivized ecosystem to the developers. They would develop innovative and customized applications for specific markets which would address specific needs and in turn, attract more customers to the service. Thinking further, an ecosystem of these Apps stores from various service providers can provide further scale up and growth opportunities to them.
For example, a Kenyan MPesa customer on his visit to Ghana, can simply download an app to pay parking fees or make some quick purchases in a busy market in Ghana. Implementing platform level and customer level interoperability would be the foundation to build this big ecosystem.
2. Transformation of traditional model of B2B payments – Increasingly, mobile money is finding its application in the Retail industry for Point of Sale (PoS) transactions. Interestingly, I would expect more Business to Business (B2B) mobile money solutions to emerge for various industries. These solutions would focus on transforming the way payments are being made throughout the value chain. The aim would be to reduce risk of carrying cash, optimize liquidity, and provide delivery of goods and payments with security.
For example, Coca-Cola Sabco is looking at the use of mobile money as a way to shift the supply chain of its Manual Distribution Centers away from cash. In Papua New Guinea, IFC is looking at piloting mobile money to reduce the use of cash in the coffee supply chain.
3. Development of new business models – Traditionally a Mobile Network Operator (MNO) or a bank provides the mobile money services either individually or in collaboration. Of late, new business models are emerging as different industries are exploring mobile money based custom applications.
For example, Bharat Sanchar Nigam Limited (BSNL), a leading telecom service provider in India, has a mobile banking platform which will help mobile subscribers to send money orders electronically. The unique thing is that this SMS based service is done in association with India Post. Receiver will be able to encash the SMS at all post offices in the country. Starbucks, a leading coffee chain is already among the most successful early adopters of mobile payments, claiming to have processed USD26 million in mobile transactions in the US just 12 months after launching the service. Recently, it has forged a partnership with Square that will see the mobile payments company power in-store credit and debit card payments for Starbucks.
I expect that more of these innovative and interesting partnerships will emerge which would utilize mobile money to conduct business more efficiently and effectively.
I look forward to your comments and observations. Please click “Add a Comment” below or “More Actions” to share this with others.
Welcome! This is the first post in a series of articles I’ll be writing over the coming months that delve a bit deeper into some of the more interesting findings from our State of Smart research here at the IBM Center for Applied Insights. Today we’ll be discussing some of the interesting data points for the retail industry including some surprising findings about CRM.
If you’re not familiar with our State of Smart work, an overview of our research and findings can be found in our Executive Report. We surveyed over 1100 executives worldwide across 9 industries to determine their organizations’ information and analytics capabilities (we refer to these capabilities as “listen” and “anticipate”). We found that organizations with these capabilities significantly outperformed their peers: 1.6x revenue growth, 2x EBITDA growth, and 2.5x stock price appreciation over a five year period. Not bad, huh?
But this only tells part of the story. We also asked these enterprises about where they realize value from analytics and how they deploy “listen” and “anticipate” capabilities. So let’s dig into the retail data a bit deeper.
For our purposes, we’re going to refer to retailers in the top right quadrant as “Outperformers” and everybody else as “Others”. Only 29% of retailers are Outperformers. About 62% of retailers have a high level of “listen” capabilities while only 38% of retailers have a high level of “anticipate” capabilities.
What this tells us is that retailers are pretty good at “Listening” – i.e. capturing data. By and large, most retailers have done a good job of laying down an information foundation. However, a much smaller proportion of those retailers are then translating that data into actionable insights.
So we know that retailers have room to improve when it comes to leveraging the data that they capture. What other interesting insights did we uncover?
For starters, as you might expect from the high “listen” capabilities, retail Outperformers are very good at capturing different types of data. Specifically, 84% of Outperformers capture data at every customer interaction (this was the highest % across any industry we surveyed). The 'data at every customer interaction' spread between outperformers and others is 2.2x, the second highest gap among the nine industry categories.
Additionally, the 56% of the Outperformers captured unstructured data versus 35% of the Others. Essentially the Outperformers are looking beyond individual transaction data and are mining social media, weather patterns, etc to drive more robust information for applied decision making.
The Outperformers then leverage this information to drive actionable insights about their customers. For example, 84% of Outperformers (vs 38% of Others) use their information and analytics capabilities to recommend actions to customers. This can take the form of both customer facing recommendations, such as cross-selling or up-selling opportunities, or internal actions such as identifying next best actions to convert abandoned baskets or reactivate a dormant customer.
The holy grail of retailers has long been to develop deep insights about customers from a variety of data sources and then use these insights to drive actions that positively impact the customer experience and consequently improve their top and bottom line. Our data shows that the Outperformers are doing just that.
What we’ve talked about so far is fairly intuitive. However in the course of analyzing the State of Smart data we saw several things that intrigued us. For instance, found that only 36% of Outperformers vs 31% of Others realized value from customer relationship management. We expected the overall percentages to be higher and gap to be wider. The data suggest several things. First, the true value of CRM has likely not yet been realized by most retailers. Second, the outperformers haven’t yet found a way to drive the additional insights they’ve been generating into their CRM practices.
Hopefully you found this deep dive into our State of Smart retail industry data to be interesting and useful. If you're interested in calculating the potential impact that developing your "listen" and "anticipate" capabilities can have on your business, I suggest you take a quick look at our Smarter Merchandising and Smarter Shopping Experience toolsets. We've developed online calculators that let you quickly and easily get an idea of the potential economic benefits that leveraging analytics can have for your organization.
I’ll be posting more deep dive articles over the next few months. Check back next next week for a deep dive into the banking industry data. If you have any questions about this article or requests for future articles, please feel free to let me know.
Client Insights, Senior Consultant Center for Applied Insights
Platform as a service (PaaS) is at a critical stage in its life cycle – with promising business benefits offset by lingering reservations. PaaS promises increased flexibility, lower costs and higher quality IT services, while maintaining control over data and applications. It sits squarely between infrastructure as a service and software as a service, and could prove to be the most transformational of the three main types of cloud computing.
The IBM Center for Applied Insights wanted to explore attitudes around PaaS in order to identify leading practices in PaaS adoption and provide recommendations on how to exploit its potential. We interviewed over 1,500 IT decision makers in 18 countries and a wide range of industries so we could better understand their motivations, experiences and concerns relating to PaaS. This week, we released the results of our exploration in our latest paper “Exploring the frontiers of cloud computing – Insights from platform as a service pioneers”.
The report goes into more detail on the benefits and challenges surrounding PaaS, how to overcome the challenges and what an enterprise can do to start, or continue, their PaaS journey. For a view from cloud pioneers CLD Partners, check out their post on IBM’s Thoughts on Cloud blog. For more information about IBM’s SmartCloud Application Services launch and the study check out a recent article by ZDNet.
This famous quote from U.S. Supreme Court Justice Louis Brandeis extols the virtues of openness and transparency – shedding light on peoples’ actions to avert wrongdoing. In our high-tech times, organizations would be wise to apply this thinking to address “shadow IT” – employees using software-as-a-service (SaaS) applications that are procured and deployed without going through established IT channels and policies. Let’s see why.
The SaaS train has left the station, and there’s no slowing it down: global spending on SaaS is forecasted to grow at a CAGR of 20.2% in 2012-2017, reaching US$45.6 billion by 2017.
The IBM Center for Applied Insights has just released a global study of 879 IT and line-of-business (LOB) SaaS decision-makers: Champions of Software as a Service: How SaaS is fueling powerful competitive advantage. The research reveals that application agility – the ability to quickly, easily, flexibly deploy applications and implement solutions – is the number two driver for adopting SaaS (following close on the heels of reducing total cost of ownership), so it’s easy to understand why businesses find SaaS so irresistible.
The temptation is great for employees to quickly and easily deploy SaaS applications without involving the IT department to approve, provision, and secure them – but these rogue deployments can expose the organization to security risks and other negative consequences.
So, what does “sunlight” have to do with SaaS? The IBM study grouped organizations based on their level of SaaS adoption and whether they’re reporting competitive advantage from SaaS. Pacesetters are the 19% of respondents reporting the highest level of SaaS adoption and gaining competitive advantage through their broad SaaS efforts. At the low end, Chasers are much slower to adopt SaaS and gain competitive advantage from it.
Rather than deploying SaaS on the sly, pacesetting enterprises actually cultivate a strong collaboration between LOB and IT on SaaS activities such as selection, deployment, and security.
In 71% of Pacesetter organizations, LOB and IT strongly collaborate on SaaS selection and deployment, whereas only 36% of Chasers report a strong collaboration. 70% of Pacesetters report that SaaS is strengthening the IT and LOB relationship, versus only 39% of Chasers.
A strong strategy is another significant differentiator of the Pacesetters’ approach to SaaS: Compared to Chasers, more than twice as many Pacesetters have a cohesive, enterprise-wide SaaS strategy (71% versus 31%), and Pacesetters are four times more likely to position SaaS as an integral part of their enterprise cloud strategy.
The dark alleys of “shadow IT” lose their danger once one shines a strong light on them. Fostering a well-defined SaaS strategy and encouraging strong IT/LOB collaboration around SaaS are the “sunlight” that leading SaaS enterprises use to combat shadow IT.
In my previous post, I emphasized the importance of consumer focus for CPG companies. We, at the IBM Center for Applied Insights, have been working on a comprehensive global study* to gain more quantitative and qualitative insights about the increasing consumer focus of these CPG companies.
For the purpose of this study, we have segmented the market in terms of the degree of consumer focus and the use of analytics by the survey respondents. In this post, I would like to point out towards the most notable finding of the lot: existence of a “Leader” group amongst the survey respondents which enjoys much more clout with the retailers. In fact, they are nearly three times less concerned about needing a retailer’s approval to execute their plans, and 1.4 times less concerned about seeing their planning processes extended as a result of delays. They also exhibit superior financial performance over the rest. Between 2009 and 2012, the leading publicly quoted consumer products companies in our sample saw their stock prices rise 1.6 times faster than the rest (16 percent cumulative annual growth rate for Leaders compared to 10 percent cumulative annual growth rate for Others).
The companies in the Leader group use advanced analytics and collaborate extensively (both internally between functions and externally with retailers) to develop a high degree of consumer focus.
As shown in the figure 1 below, they comprise of about 15 percent of the total respondents.
The executive presentation will be delivered at the IBM Smarter Commerce event at Nashville this week.
For more details and insights on what exactly are these leaders doing differently than the rest and what steps can be taken to become one, revisit this space in a month. The Center and IBM DemandTec are authoring a complete paper on this topic, due out by the end of June.
I look forward to your comments and observations. Please click “Add a Comment” below or “More Actions” to share this with others.
Note - For the purpose of this study, we conducted telephone interviews with 356 senior sales executives at consumer products companies in Australia, Canada, India, the United Kingdom and United States, between February, 2013 to March, 2013. These respondents cover 10 product categories. Forty-six percent of them work for large enterprises (employing 1,000 or more people), while 54 percent work for medium-sized enterprises (employing 100-999 people).
The Guardian's Media Network recently hosted a live chat around the topic of how CMOs can align and use digital marketing and data analytics - two areas we've taken a close look at since the inception of the IBM Center for Applied Insights.
The Guardian notes:
Big data (and analyzing that data) means that marketing professionals are now getting even closer to the customer – they know more about audiences than ever before, with pinpoint precision. At their fingertips a marketer now has detailed facts and figures about consumer browsing habits, their favorite brands, how they use social media. It means that campaigns can be targeted, analyzed and proved better than ever.
It becomes the job of marketers and CMOs to make sense of all that data and not get lost in the noise. Doing this, takes an analytical and curious approach to data. It's easy to find the "big numbers" but more challenging to find the "right numbers." As Surjit Chana, CMO of IBM Europe, has said, the core principles of marketing haven't changed. What has changed, dramatically, is how those principles come to life in today's marketing campaigns, customer experiences, and business results. In our paper, Marketing Science: From descriptive to prescriptive, we found that only 23% of marketing professionals use tested analytic approaches to understand the vast amount of data they have access to. More traditional marketers, using data to describe outcomes but not determine actions, consistently use data at face value - without applying data models or scientific thinking.
When technology and analytic skills don't exist in the marketing teams, it makes perfect sense to build partnerships with those who do. The closest partner in most organizations is IT. Thus, the renewed focus on CMO + CIO collaboration. We're continuing to watch, collaborate, and recommend approaches to our C-Suite colleagues. Check out "Understanding leading retailers" to see how the retail industry is collaborating with IT and partners to serve customers better.
Susanne Hupfer, Consultant, IBM Center for Applied Insights Our director, Steve Rogers, recently interviewed Paul Brunet, IBM Vice President of ISVs, Start-ups, and Academic Programs, about his perspective on the 2012 Tech Trends study. Whether you're an IT or business decision-maker, an academic, or an IT practitioner, you may discover valuable insights and recommendations in their broad-ranging conversation.
IT and business leaders: Why are CEOs regarding technology and skills as top concerns -- now outranking even market and economic forces? Why is it crucial to leverage emerging technologies for competitive advantage? Paul discusses four technology areas -- mobile, cloud, social business, and business analytics -- and contrasts adoption and skill levels in mature and growth markets. He covers challenges to adoption -- such as security, skill gaps, and integration -- and explains why security is a business imperative. IT and business decision-makers may also be eager to learn more about the elite "pacesetter" group identified by the study, who are unlocking competitive advantage by being more market-driven, experimental, and analytical.
Academics: How can academia better monitor the needs of the enterprise and teach relevant skills their students will need upon graduation? Paul also examines how using sandboxes and collaborative spaces can encourage experimentation, skills development, and collaboration across universities and practitioner areas.
Practitioners: Where should you be expanding your skills? What traits are IT leaders looking for today?
Paul and Steve talk about the importance of integrating business along with IT skills.