The myth of trust: why consumer feedback is making us rethink IT (new article at ServiceDesk360)

Following on from my Tomorrow’s Future Today presentation on the same subject, I’ve written a blog for the UK-based ServiceDesk360 site, which is run by the organisers of the Service Desk and IT Support Show (SITS).

Jon Hall at ServiceDesk360.com

Notes from the CITE 2013 Conference in San Francisco

Logo of CITE (Consumerization of IT in the Enterprise)

Last Monday (3rd June 2013) I was fortunate to be able to attend the first of two days at the Consumerization of IT in the Enterprise (CITE) conference at the Marriott Marquis in San Francisco, CA.  This was the conference’s second year, and drew a healthy attendance of delegates, many of them CIOs and CTOs for significant organizations.  Consumerization is here, and IT executives are realizing the importance of embracing it.

My employer, BMC Software, was present as a sponsor, and was demonstrating several products including our new end-user-focused product MyIT.  In addition to some time in the booth, however, I was also able to attend a full day of conference sessions, and with a strong agenda it was often difficult to choose between overlapping meetings.

Some highlights:

Metrics from IT Consumerization’s frontline

IDG Enterprise’s Bob Melk (@bobmelk) presented key findings from his organization’s 2013 report on the consumerization of IT in the enterprise. Some important points from the presentation include:

  • Asked about the top challenges arising from consumerization, the most popular answer, from over 82% of large organizations was security, followed by privacy and compliance issues (65%) and lack of control (53%).
  • One challenge that was not called out by the majority of organizations was the inability to measure ROI. 69% of large enterprises responded that this was not a top challenge.
  • Within the scope of security, the biggest challenges called out were the difficulty of installing controls on user devices (54% for large enterprises), and the difficulty of integrating devices with existing security systems (44%)
  • Asked if they were confident that they were ready to increase access to consumer technologies in the workplace, only 15% reported that they were “very confident”. 45%, however, responded that they were “somewhat confident”.  Interestingly, this has doubled since the 2011 survey.
  • Productivity is an objective: More than half of the respondents are looking to achieve increased productivity and better employee access to work materials anytime/anywhere.

Cisco – “Not so much the Internet of Things, as the Internet of Everything!

A fascinating presentation by Cisco’s Marie Hattar (@MarieHattar) pointed out that over 99% of the things that could be connected to the internet still aren’t.  That’s 1.5 trillion things, of which 96.5% are consumer objects. Putting it another way, it’s 200 connectable things per person*.  This, Cisco believe, is a $14.4 trillion market just waiting to be addressed, a case set out in more detail in their white paper here.  We are already in the age of the “Internet of Things”, they argue. The “Internet of Everything” is the next step on the journey.

(*my brilliant colleague Chris Dancy (@ServiceSphere) probably gets close to that number with a single arm, but we should probably place him amongst the leaders on this metric.  You can watch him on this subject at the SDI conference in Birmingham, UK, on 19th June. More details here).

Panel Discussion – The Social Enterprise

In an interesting panel discussion alongside Kevin Jones (@KevinDJones) and Ted Shelton (@tshelton), Tom Petrocelli (@tompetrocelli) of ESG Global argued that the traditional hierarchical organization is changing.  This is a challenge to those who might normally move up the hierarchy, if it is not in their interest for their organizations to transform into a more disparate, networked structure. Social enterprise, according to Petrocelli, is not so much a technical challenge as a management one (edit at 8:16PM BST 10th June 2013: Tom has tweeted me with what I think is a useful addition: “Remember, though collaboration is a management problem and technology isn’t the answer, it is part of the answer”).

“Crapplications”

Brian Katz (@bmkatz) of Sanofi presented an entertaining analysis of good and bad mobile applications.

A very detailed mobile UI application (photo from Brian Katz's presentation at CITE 2013)
Brian Katz presented examples of good and bad mobile UIs. Guess which category this fell into?

There was a strong message too: “If you don’t have a mobile strategy, you don’t have a strategy”. Brian’s view is that organizations should develop their apps on mobile, then bring them to tablets and desktops. Microsoft Word, for instance, has hundreds of features, which would make no sense to a user of an iPad application.

The great HTML5/Native debate

From a mobile applications point of view, one thing that was abundantly clear is that there is still no consensus on the HTML5-versus-Native debate.  TradeMonster’s CIO, Sanjib Sahoo (@SahooSanj) put a passionate and solid case for the former. An HTML5 approach enabled them to deploy a trading application more quickly and less expensively than their competitors. Their app is strongly rated by users, and Sanjib spoke of HTML5 being seen as a “great long term strategy”, while acknowledging difficulties such as memory footprint, and the fact that HTML5 is not yet a true cross-platform technology.  He also pointed out that the limited data cache available to HTML5 applications compared to truly native applications is not really a problem for real-time trading applications where live data is the key requirement. For other requirements, it’s definitely more of a factor.

How customer feedback will transform ITSM

Five stars

Feedback is a huge part of a consumer’s experience. There is no reason to believe it won’t be one of the major factors in consumerization of corporate IT

A search result showing over 40,000 results for a search on the term "bed bugs"
A search of TripAdvisor’s reviews for “bed bugs” on yields over 45,000 results!

A decade or so ago, I paid a then-pretty-hefty £100 to stay in a suburban London hotel, close to the venue of a friend’s wedding. It was in a handy location, had a nice-hotel name, and a reassuringly weighty price-tag. In fact, I was looking forward to seeing what my hundred pounds bought in the suburbs.

To this day, that hotel trip remains a firmly-etched and very unpleasant memory. It was, simply, awful. By that, I don’t mean that familiar complacently-mediocre standard that we all encounter once in a while as consumers, but properly, mouldily, thinplasterboardally obnoxious in its awfulness. I would have been scared of a fiery death, except it was too damp. With insufficient time available to turn around and walk away, I had little choice but to hold my breath and stick with it.

Like many of you in ITSM, I am no stranger to hotels. Working for a number of years as a field consultant, travelling most weeks, I began to notice a new trend: the hotels coming up cheapest on the price comparison sites also had the worst reviews on TripAdvisor. Today, it’s easy to see this effect: try searching for three-star hotels in a city like London, sorting by ascending price (the impact is particularly obvious on the late availability clearing sites). Simply, the rubbish hotels are seeing their prices forced to the lowest levels.

Why? Because now, everyone is informed.

TripAdvisor has changed hotel choice forever, providing a wealth of opinion and reviews, detailed photos, and real experiences. Proprietors live in fear of harsh reviews: a study in 2011 by Cone Research concluded that 80% of potential customers would change their mind after reading a bad online review. And, because angry customers tend to seek an outlet for their frustration more often than happy ones, poor service gets disproportionately highlighted.

Today, establishments like suburban London’s Hotel Streptococcus (not its real name, more’s the pity) can’t get away with it any more. They improve, or they die.

In addition to informing consumers, feedback has become a valuable product in its own right. It has pushed aside the old classified directory model, in which an individual business’s profile against its peers was driven by advertising (evidenced by the hurried acquisition of review services by some of the “traditional” yellow-pages-style directories). The key players in the feedback market now benefit from a classic virtuous circle: the more feedback they collect, the more useful their service becomes, and hence the more people begin to both consume and produce their content.

Interestingly, both small and large businesses are benefitting. In the restaurant sector, for example, review sites like Yelp have led to a boost in trade for many independent businesses, while having a less obvious effect on brand-name chains. Michael Luca, in a study for Harvard Business School, observed that for these independents…

“A one-star increase in Yelp rating leads to a 5-9 percent increase in revenue”

We recently renovated our house. One tradesperson in particular, our plasterer, was superb, and I offered to act as a reference for his business. Instead, he asked me to leave a good online review. For small businesses, the online feedback IS the brand.

Reviews Have Driven the Dominance of a few Service Brokers

However, while the impact may be less significant for chain hotels and restaurants (where the reassurance of brand familiarity persists), it has arguably been a huge factor in entrenching dominant brokers of other people’s products and services, such as retailers and online marketplaces.

Amazon is a prime example. The recent 20th anniversary edition of Wired magazine looks back at the rise of online retail, and the almost universal early assumption that consumers would be driven almost entirely by the cheapest prices: comparison sites would be king. As the magazine points out, this has not been the case. The big winners, like Amazon and eBay, have dominated. In each case, reviews (whether of products or of vendors) are a central feature. They draw people to the site. A five star product review backed by a large number of previous customers gives solid confidence to make that purchase. And each buyers may complete the virtuous circle by adding to the ever-increasing pool of feedback.

Feedback will be Huge in IT

For IT, the huge rise of feedback teaches us some very relevant lessons:

  • Positive reviews can break customer habits, shifting them from a familiar and established provider to an upstart alternative

IT has been the “branded chain restaurant” for decades… The familiar choice, offering a degree of certainty if not perfection (Ray Kroc, founder of McDonalds, advocated that customers didn’t want a perfect burger as much as they wanted burgers that always taste the same). But just as reviews have boosted independent restaurants, they will bolster be best upstart IT providers. Suddenly, the uncertainty is within: how can I be confident in my IT department’s new, unrated cloud storage service, over a five-star-rated public service?

  • A service provider with a review mechanism for services differentiates itself from equivalent providers without one

IT departments are evolving into “brokers of services”, some self-provided, others bought in. Our customers expect to self-select service offerings, and IT even needs to justify its role in being the front-end for that solution. External providers will increasingly provide reviews and feedback, driving engagement and confidence with our customers. IT needs to do the same.

  • Feedback is a huge part of a consumer’s experience. There is no reason to believe it won’t be one of the major factors in consumerization of corporate IT.