IT Optimization in 2002

Optimization. It sounds so incremental. Boring. For tweakers and PhDs. Is all the fuss really warranted?

Here’s the basic idea: During the past few years, you’ve spent hundreds of millions on core systems (ERP, CRM, SCM and so on) and to populate those systems with data (and you’re not done yet, by the way). That data is useful, but it’s a mess. And you can’t get at it in real-time, correlate it, leverage it, segment it or get it to where it’s useful?points of interaction with the customer and points of decision making inside your company.

The basic idea behind optimization is quite simple: Unlock the potential of that data, and apply it to your key business processes to make them more efficient and profitable.

But can it be done? Can optimization really make a difference to your bottom line? Yes, thanks to new and more powerful real-time integration, process and analytics technologies. Whether you’re matching supply chain data to customer demand data (to optimize profitability), adding business rules to a workflow process (to optimize efficiency), or leveraging knowledge about customer preferences (to optimize customer satisfaction and revenue), the benefits can be very real. And there are some very real examples.

DHL is using software to customize and optimize pricing for large accounts based on prior customer history (from the CRM system) and business rules reflecting the company’s cost structure. Target: To enable its salespeople to write more?and more profitable?business.

E-Trade is using intelligent call-routing software to cherry-pick high value customers who call its 800-number (again by dipping into the CRM database) and quickly connect them with an agent whose skills match the customers’ likely problem. Target: In financial services, 15 percent of the customers can generate 300 percent of the profits. You do the math.

Canadian Imperial Bank of Commerce is using workflow and business process management software to document and eliminate inefficiencies in the back-office processes of its private-branded banking services division. Target: Additional accounts opened, in a shorter time, while using fewer people.

Sounds good, you say, but what does it take to do optimization well? Here are some quick thoughts, whether you’re trying to optimize a customer-facing or internal process.

It takes discipline. As a friend told me recently, you can buy the best pair of running shoes available, but you still have to train. Scrub the data. Build the model. Connect the systems. Write the middleware. Nothing is easy.

It takes focus. Begin with the end in mind. With all that data floating around, you can be tempted in a lot of different directions?don’t do it! Get buy-in from the organization in advance on goals, scope and how you will measure the success of the project.

It takes follow-through. If the process you’re optimizing involves a productivity benefit, you may have to let people go to get the benefit. You may also have to do some training?people are wedded to their old ways.

It takes a multichannel mind-set. It doesn’t pay to optimize silos; if you do, you just won’t get the return you could. If you’re doing it in the call center, do it in the stores. Do it for self-service. Do it for the field. Do it once, and do it right.

It takes partners that know what they’re doing. You can buy generalized process management and business intelligence software, write rules and workflow yourself until the cows come home. Or you can find a vendor with domain expertise and leverage work it’s already done. I recommend the latter.