According to Steve Bates, Principal in the US firm and global leader of KPMG’s CIO Center of Excellence, Research and financial results are proving that the winning operating model of the digital era is a fully integrated front, middle, and back office, creating what KPMG calls the connected enterprise, all laser focused on the customer.
When designing a connected enterprise, front-middle-back office alignment is essential. But what does that mean? If we look at data, for example, a connected enterprise easily shares data throughout the organization by ensuring the chief information officer (back office) partners with the head of sales (front office) and the chief supply chain officer (middle office) to build both a customer- and company-centric data strategy. Companies demonstrating a greater ability to execute on a customer-centric strategy spanning the organization are eight times as likely as their less-successful peers to deliver experiences that consistently exceed customer expectations2. Customer-centric organizations are also 38% more likely to report greater profitability than ones that are not3. Connected enterprises are significantly more nimble and responsive to ever evolving customer behaviors and changing competitor strategies.
One of the key differentiators of a connected enterprise is a holistic approach to digital transformation and unleashing the power of technology across the value chain without the burden of it. “If you’re like many organizations, you may struggle to deliver value to customers while delivering a meaningful return to the company. This is often due to a focus only on customer-facing operations,” continues Bates. Fragmented digital infrastructure and lack of alignment between front, middle and back office functions – from customer service, to supply chain and operations, HR and IT - can impact the ability for organizations to deliver seamless customer experience and drive growth.
For example in the retail sector, retailers still organize by channel, with separate P&Ls, leadership, and incentives for stores and e-commerce. They invest heavily in front of house technology, but run separate applications, managing forecasts and inventory independently. This failure of alignment results in lack of inventory visibility across brick-and-mortar and online channels and inconsistencies in products and pricing across channels. Retailers struggle to “onboard” items, vendors, and content in their legacy applications fast enough to meet the “always available, immediately deliverable” expectations of customers. The result is supply chain and inventory management systems that cannot meet the commitments made by channels at presale or point-of sale leading to lower customer satisfaction and higher service costs.
To achieve the performance boost that a connected enterprise delivers depends on frictionless technology. Most of these are either provided by IT (e.g., technology architecture, agile methods, and secure platforms) or enabled by IT (e.g., responsive supply chain, advanced analytics).
It is clear that the future of IT will be inexorably intertwined with this concept of the connected enterprise. The rationale and promise of the connected enterprise powered by digital technology is real. However, in many cases, the IT function must go through its own transformation in order to be an effective business partner in a digital world.