IT systems are usually built to serve a single business process phase. Traditionally this has been enough – it isn’t reasonable to expect that a single system can fulfill all the needs of a complex business process.
But there is a flaw in this common approach: usually the data produced and utilized within each IT system is by design handled only within that single system. The system and the data are understood to be one and the same. "Our customer data is in the CRM." Sound familiar?
This is how it should not be. Systemic silos are the biggest reason why companies are not able to maximize the benefits of data in creating a better customer experience. You most probably have customer data e.g. in your delivery and customer service systems.
In practice these silos mean, for example, that customer experience records produced by post-sales services are usually not made fully visible to the sales organization and combined with all other customer data. Or, when submitting an order, you need to manually email further details to the delivery organization.
This traditional but widespread approach lacks a process-wide data utilization design. In order to pay more attention to data lifecycle within the whole business process, companies need better data governance practices.
Confused? Let’s examine the question a bit further.
Vertical systems, siloed data
Traditionally IT systems have been built as vertical – or to put it more bluntly, siloed – solutions: an IT system supports a certain process phase. This is agreed to be a best practice, for two reasons: it ensures that the scope is narrow enough, and it gets the system to production use within a tight project schedule (time to market, TTM) and budget (cost).
On the surface, there is basically nothing wrong with the traditional model. According to common understanding, any business manager or CIO operates perfectly when trying to minimize TTM and cost. But does the traditional model, with its narrow scope and tight schedules, really serve your business in the long run?
There is a serious glitch included in this approach: Your business process does not focus on single phases and the separate systems they use. No, a business process, typically a "sales to cash" process runs horizontally, applying to each of the key phases:
As shown below, each of these business process phases has typically one or some IT systems that it uses. Each of these phases tends to create new data only to their respective "own" system: Basically, the vertical approach means that each phase mainly cares about itself.
For example, the aim of the final phases – delivery and invoicing – is to do just that and not to worry about or utilize the data gathered in the other phases – or to provide secondary data for other phases (like payment delay data for sales).
The customers, however, see your business processes horizontally. They personally experience only the "customer facing" phases but this experience can be greatly affected by the data gathered in other phases and their systems. The vertical approach to data, systems and solutions is often too short-sighted to the needs of the whole business, let alone customers.
A system’s purpose is to handle data, to implement the business process. All necessary data should be available for your business process, and thus for the systems implementing the process.
Some IT departments and their IT consultants try to mend this problem with data warehousing, but it is not the right answer. Neither is master data management (see this article for more information on why). They are both good concepts but utilized only for a very limited amount of your company’s data. These concepts should be applied to all operational data within your business process.
Another issue usually forgotten is all the operative data produced by your business partners. They may have a huge impact on your customer experience (especially if they act on the later part of your business process), but are you able to utilize the data they produce while working for you? Or can they utilize your data to serve the customer in a better way?
As a result, most of the operational data currently "locked in" within a single IT system, not enabling process wide data utilization.
Luckily, there are ways to fix the problem.
Set your data free!
A comprehensive way to solve this issue is to discover the data lifecycle throughout your business process and define your current data architecture
Optionally, you might also want to find out what value current data has to your business process at each phase - and hidden opportunities you might have.
The data freedom can be achieved by separating the operational data from the systems. This is both (already) traditional data consolidation, but more importantly an architecture shift. Business should understand their data architecture and let IT handle the IT architecture. The business should own the data, especially if your strategy is to gain competitive edge by using your data.
Each system does not need to have their data within the system. The operational data could be consolidated. You should understand “systems” as something that creates, modifies or utilizes the data in some way. A system should not be responsible also for storing the data nor making it available to others and a system should not be the scope of the data:
By making data available to all the different process phases and the systems supporting them, organizations can speed up the continuous improvement for each of the IT systems. And what’s more important, they also get to utilize their data throughout business processes, enabling continuous, data-driven improvements that lead to more seamless customer experience.
Free the data within your company, for the benefit of your customers.
Check back for more tips on how to make your business data-driven!
Business Development Manager