A Daunting Diagnosis

Are your customers suffering from SILO syndrome

The e-business gold rush has been exciting, intense, and exhausting. The pressures to offer e-alternatives to more traditional relationships with business-to-business (B2B) and business-to-consumer (B2C) customers have been quite real, accelerating the creation and adoption of new Internet-related technologies.

This issue of Intelligent Enterprise features the first in a series of columns in which I will be focusing on understanding customers' behavior and exploring how their demands affect your technological and operational decisions. Regardless of industry or company size, all enterprises share one common dilemma - meeting customers' expectations in order to survive.

The Right Choice

Most established companies had no choice: They either had to offer customers Web-based business vehicles or be at a significant competitive disadvantage. But moving rapidly under market pressure forced companies to make IT and operational trade-offs - many companies had to prioritize time-to-market over internal system continuity and operational efficiency.

If you had to do it over again under the same market conditions, you would probably make the same decisions. Extending business relationships to customers over the Internet was of paramount importance in order to keep pace competitively. Most companies, however, had to execute their e-business strategies in a technical and operational vacuum. Companies simply did not have the time to fully integrate new IP platforms with their legacy client/server systems.

Moreover, companies couldn't design business processes, customer databases, and organizational structures to manage their e-businesses in concert with their traditional businesses. Sometimes, this disconnection was due to pressures from external forces; other times it was because executive management was skeptical of the long-term impact of e-business.

In any case, for better or for worse, most companies that implemented these e-business initiatives created disconnected e-business silos that they could launch in the face of time pressures, organizational discord, and management uncertainty.

Please realize that I am not being judgmental here. Companies did what they had to do when they built e-business silos. Addressing customers' e-demands has been essential for many companies. Even though Wall Street seems to have fallen out of love with e-business, customers haven't.

The E-Business Silo Syndrome

But now you face another challenge: You must continue delivering customer value via the Internet and your other business channels while still making profits, and you have to survive the aftermath of the e-business silo syndrome.

What's the e-business silo syndrome? It's the widespread business condition that often has the following characteristics:

• Web-based solutions that don't interface adequately with ERP systems
• Inventory-management systems that can't provide realtime inventory tracking across distribution channels
• Customers who can't define their own e-business standards and processes for interfacing with their suppliers
• IT departments that have such a long list of projects that their companies cannot keep pace with ongoing external and internal demands.

Do these problems sound familiar?

Ironically, the very technology revolution that necessitated the rapid-fire creation of e-business silos - the Internet - is also the technology that makes companies' silos so painfully apparent to customers. And believe me, customers feel the pain of poorly integrated systems. Inadequate, disjointed computing solutions and business systems are not just internal problems; they have become highly visible customer problems as well. And I'm not lecturing to dot-com startups here - I'm talking to well-established companies.

Checking for Signs

Many silo syndrome symptoms are apparent when you analyze customers' attitudes and behaviors. In the B2C space, consumer' complaints that brick-and-mortar brands are inconsistent in their value proposition across channels often include the following:

• The Web site doesn't have the same products as the stores.
• The Web site doesn't indicate when the product is out of stock - even though the telesales representatives seem to know when a product is back-ordered.
• The Web site won't let customers redeem a gift certificate that was purchased in the company's retail store.
• The package doesn't arrive when the system promised.
  Interestingly, these complaints often focus on the brick-and-mortar brands that consumers have traditionally known and trusted, which causes consumer cognitive dissonance. A poorly integrated customer experience across channels can tarnish the brand image overall.
  The B2B version of the silo syndrome is quite different, but equally lethal.
• Customers who want to make routine purchases online lament that very few vendors offer online custom catalogs with their corporate negotiated prices, selected product sets, and automated invoicing.
• Customers must still call a sales rep to get pricing and availability information and place orders. Customers must still process paper invoices.
• Online inventory levels of key components are inaccurate or simply unavailable, restricting the supply chain from efficient, just-in-time production.
• The ROI of marketing investments can't be assessed across all distribution channels because sales transaction data is not consolidated in one system.
• Customer histories of technical support problems aren't complete because online and call center troubleshooting log files are not integrated.

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Each of these silo syndrome examples is taken from recent, direct conversations I have had with customers in focus groups and surveys. If you think your customers don't realize how "silo'd" your business is, think again.

Call for Action

I hope I'm telling you something that you already know. But speaking on behalf of customers, I want to emphasize the call to action for intelligent enterprises: Now that the fundamentals of your e-business are in place, you must bring disparate corporate systems and processes together.

As you seek a new model for organizational and business process structure, return to the basic business principle: The customer should still be the center of your company's universe. Your e-business must be brought into the operational fold so that you can deliver cohesive, effective customer relationships across all modes and channels of business. However you choose to execute your plan, remember that today's Internet-savvy customer expects cohesion - nothing less will do. It's as simple, and as daunting, as that.

Laurie Windham (lwindham@cognitiative.com) is the CEO of Cognitiative Inc., a management consultancy. She is the author of two business strategy books, The Soul of the New Consumer: The Attitudes, Behaviors, and Preferences of E-Customers (Allworth Press, 2000) and Dead Ahead: The Web Dilemma and the New Rules of Business (Allworth Press, 1999).