“It’s a new dawn, it’s a new day, it’s a new life for me” – Nina Simone
A couple of years ago I saw former CEO of Burberry, Angela Ahrendts , at a conference talking about the importance of technology during her six-year tenure at the helm of the company. A January 2013 piece in the New York Times paints a great picture of the relevance of technology for Burberry: “From e-commerce to social media strategies, fashion brands are trying to ensure their technological efforts are as cutting edge as the hardware on their handbags. And nowhere has that focus been more profound than at Burberry, the British heritage brand founded in 1856.”
One of my takeaways from Mrs. Ahrendts’ presentation was when she explained the role of her CIO, which she summarized as: “I asked him to move from the back, to the front of the bus.”
The fact is that the strategic intention of technology within the company has been shifting, and companies rely heavily on IT as a core component of their strategy. This is well reflected in Gartner’s prediction that by 2017 the CMO will have as much, if not more budget for IT, than the CIO. Certainly the CMO has a longstanding tradition of being the business owner of IT infrastructure in areas like Customer Relationship Management (CRM) or Sales Automation, but now the CMO role is extending way beyond defining user specifications and relaying requests to IT. To borrow from Ahrendts’ analogy, I think the CMO is also moving to the front seat of the technology bandwagon. In fact, I think that the CIO and the CMO can create a fantastic team, as pilot and co-pilot of the technology airplane.
For the past four decades IT has fundamentally been focused on building solutions to capture and process data from financial transactions, human resources, order processing, inventory management, supply chain management, and the likes. Collectively, these systems were denominated by Geoffrey Moore as “Systems of Record” (SoR) in a 2011 whitepaper . These are systems that reside in a mainframe environment or that are integrated into an ERP.
The newer generation of systems is collectively known as “Systems of Engagement,” (SoE) according to Moore. Forrester Research declares that Systems of Engagement “empower customers, partners, and employees with context-rich apps and smart products to help them decide and act immediately in their moments of need.” Mobile apps, Business Intelligence, Social Technologies would fall into this category.
The fundamental difference, according to Forrester, is that SoR touch processes, while systems of engagement touch people. A case can also be made that SoR) are designed to support the business whereas systems of engagement are designed to drive and differentiate the business in the marketplace.
A good example of an SoR would be the checking account management system in a bank. It is designed to credit, debit and keep a balance of the different accounts the bank handles for customers. The truth is that the financial institution would hardly differentiate itself by how fast this application can credit or debit an account, but it will when this application is interfaced with SoE. These SoEs allow the client to credit a check by taking a picture of it on her smartphone or alerting the bank teller or phone operator that the client can benefit by moving some of her money from checking to a 30-day CD. Based on her historic debit pattern, this would not affect the liquidity that she needs. Furthermore, the bank’s app can alert the customer that a financial advisor is available to speak with her about the mortgage loan she has researched, the very minute she walks into the open house in her favorite neighborhood.
SoRs tend to be internally focused, very stable, with a long-term lifespan, operating in a standardized environment across an organization or business function. SoEs, on the other hand, are more often externally focused, operated by the consumer, very dynamic, based on open standards, and in most instances they run in smart and geographically aware mobile devices.
Building systems of engagement and bridging them to systems of record requires constant collaboration. Business executives become more tech savvy, and IT becomes more externally focused and much more aware of its own strengths as a change agent and as a facilitator to maintain the business records while accelerating engagement, co-piloting the airplane.
Certainly the CMO has learned to rely on and lead the business through technology, and other tech-savvy business leaders are catching on, too. Angela Ahrendts, through promoting business and technology collaboration, has been able to bridge the gap between systems of record and systems of engagement. She led Burberry to double its annual revenue and earnings per share during her tenure at the company, before taking her new job at Apple in the newly created position of SVP of Retail and Online Stores—a statement in itself of the relevance of understanding how to manage the digital aspects of a brand.