Does Cloud Computing maximize customer value?

Is there a case for maximizing customer value by exploiting business-ready cloud computing? I think so. But why maximize customer value instead of shareholder value? And what is business-ready cloud computing?


I recently read a compelling case for maximizing customer value ahead of shareholder value in HBR (there will always be a place for magazine print editions on my stationary bike). The article by Roger Martin is called "The Age of Customer Capitalism". Roger refers to the famous Druckerism that "the purpose of any company is to create a customer" and then goes on to discuss why optimization theory will only let you optimize one thing at a time while all other variables become constraints. His view of corporate success is to optimize customer satisfaction, while "providing an acceptable risk-adjusted return on ... equity" for shareholders. 


He compares the superior long term performance of companies like J&J and P&G which "tell shareholders in no uncertain terms to get to the back of the corporate bus", with companies like GE and Coca-Cola which were managed through the 90's by leaders whose mantra was shareholder value optimization. Roger makes the argument that shareholder value optimization is simply not sustainable in the long run because the market comes to expect too much and eventually the company falters when it falls short of expectations.


I obviously agree with Roger's assessment, having myself worked for publicly traded tech companies based in Boston, California and Germany my entire career (and a few years at the head of a small publicly traded company in Canada). In those companies we all marched to the tune of shareholder value creation, although at the field level we cared a lot about customers too. It was very confusing most of the time. Most major customer decisions revolved around margins, which created a fair amount of friction.


If you buy into maximizing customer satisfaction as the corporate purpose, at least for the moment, you might be wondering why I throwing around the term "business-ready cloud computing". First off, I apologize for being like everybody else and using the term "cloud computing". I particularly like Simon Wardley's "Cloud Rant" on this topic. He dislikes the word "cloud" being used so regularly to describe every new IT service. He believes many are being dishonest when they apply it to their service offering. In Simon's view, cloud services must provide the "standardization of an activity and its provision through utility services." 


He discusses a great example, which is close to home for me, of how most companies believe they get very little or no value from the expensive customization of their ERP systems. I was at SAP for over a dozen years and it was sometimes impossible to convince customers to use standard out of the box processes instead of re-creating their complex processes in organizational concrete. Every customization implemented today was sure to slow them down in the future.


Accepting Simon's definition of cloud computing, I feel it is useful to further differentiate a class of cloud computing which is "business-ready". This class of cloud computing is quite different from the services provided by Amazon EC2 or GoGrid Cloud Server. Using these services I am probably months or even years away from being able to provide something that is truly business-ready. To be business-ready, the following criteria must be met:

1. No assembly required. A business user is the consumer of the service. Once business user accesses the service they are able to execute work processes, whether company workflows, social media interaction, or office productivity applications. The service must allow customization, but the service supports a business user.
2. Device independent. The service is available exclusively through a browser on a PC or through the tools provided on a mobile device. Browser plug-ins or local software installations undermine business-ready computing by tying the user to a specific device. Business-ready computing is also mobile enabled. And what about the age-old arguments about whether it should be PC or Mac? In business-ready cloud computing we no longer care.
3. Social media conversant. To be truly productive the business user must have access to customers, social media tools, corporate applications, and corporate ecosystem partners within an integrated environment. This implies a strong collaborative focus amongst disciplines that are often separated in the organizational design and within the application portfolio. 
4. Customer driven. OK. Now I've put a stake in the ground. The customer is now in the center of all those pictures you draw instead of the shareholder, or the products, or the employees. I believe this is an essential element because it changes the nature of where process design starts and ends. It calls for us to completely overhaul our online presence, which today is mostly brochure-ware. It also dictates integration between applications which for some reason or another we have never integrated. 

How does business-ready cloud computing help maximize customer satisfaction?

Let's start by looking at areas where we can greatly improve customer satisfaction and identifying some application process scenarios (or business scenarios) to enable them. This is not the complete list, but it will give you some ideas:

• Buying experience. This is perhaps the nemesis of buyers we hope to turn into customers. We provide buyers with a great deal of information on our websites and ask them to figure it out on their own. If they make the mistake of registering on our website, we set our inside sales reps onto them to hassle them with qualification questions. We need to overhaul of the buying experience using a front end which is community based and provides mass-customization / one-to-one marketing (I talked about this in another blog post). A Content Management System / Social Publishing platform such as Drupal may be used to provide a problem solving customer dialog with buyers, with important results being stored in a CRM service such as salesforce.com. This greatly enhances the customer buying experience while automating the collection of key buyer information captured during the buying process. Ultimately we should be capturing critical information about the entire customer life cycle using this approach.
• Online customer service. This one is obvious. Customers should experience exceptional online service. On the back-end we need to ensure access to customer service information is made available to all of the roles in our company and our partner's organizations with customer touch points. The same tools we discussed in the online buying experience fit the bill here too.
• Mobile computing. We need to use cloud computing services which enable mobile services for all customer related processes. Access to these processes must be made available to all stakeholders with customer touch points.
• Training and education. Training as a service makes a lot of sense, but why is it that we build a product or service and then sell ourselves short by not delivering top notch online education to allow our customers to get the best out of it? This is a no-brainer. Buyers would tap into this during the buying process as well. Our own people could benefit from this tremendously - we call them knowledge workers for a reason. We need to focus on motivating them by investing in their knowledge. This requires thinking outside of the box and not restricting our view to conventional training offerings - sales training and product training come to mind. As Drucker said, "most sales training is totally unjustified. At best it makes an incompetent salesman out of a moron"... whew...he was never one to hold back his punches...
• Social Publishing and Communities. We need to organize some of the efforts of our companies to social publishing and community development. There are many platforms available for this, Drupal being one of them. This will be key to moving our organizations from product-driven companies to customer-driven companies. Emerging technologies, such as crowdsourcing add the potential to tap into large customer communities to evolve offerings to match customer needs.

The are many other business scenarios which may benefit directly from business-ready cloud computing. We'll dive into more of them in future blogs, as well as the benefits they bring to your organization.

Business-ready cloud computing will co-exist with your existing infrastructure. The best place to start in applying business-ready cloud computing is to focus on maximizing customer satisfaction. In many cases your current ERP and back-office solutions do not perform adequately to support the goal of maximizing customer satisfaction. Moving into the cloud with re-vamped customer facing processes is achievable once you have identified the business scenarios and technologies to enable them. 

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