Technologies Without Tradeoffs

Technology can contribute to achievement of business goals and alleviation of business pain areas in industries like banking, retail and telecom.

Let’s take a look at the key business goals and pain areas in these industries:

Banking
Increase customer intimacy and loyalty
Reduce operational inefficiencies and operating costs
Compress time-to-market for new products and services
Maintain compliance with government and industry regulations

Retail
Reduce inventory carrying costs across the supply chain
Meet rapidly changing customer tastes
Increase share of customer’s wallet
Reduce operating costs

Telecom
Sustain growth in emerging markets
Reduce customer churn by improving customer satisfaction and loyalty
Reduce costs

While business goals and pain areas might vary from one industry to another, “increasing customer satisfaction / revenues” and “reducing inefficiencies / costs” seem to be fairly common goals applicable across most industries.

The contribution of technology in reducing inefficiencies / costs cannot be in doubt. Internet banking, self-checkout, and online bill payment technologies have helped banks, retailers and telcos cut costs over the past decade of their deployment.

However, while technologies are busy reducing costs, are they helping companies improve customer satisfaction and revenues at the same time? This question is all the more important in the present challenging times where companies cannot afford to lose customers while cutting costs.

The track record of various technologies is mixed on this count.

Whereas some technologies like internet banking, self-checkout and online bill payment seemed to have faired well, some others like cheque deposit systems and call center phone trees appear to have failed. 

In my blog post “Cheque Deposit Systems – Are They Really Worth It?”, I’d talked about the disadvantages of this technology in the context of how it made it more cumbersome for the customer to drop a cheque: apart from having to spend more time to complete this transaction, the customer could no longer use concierge services to get it done. As a result, there’s no escaping the conclusion that, while cheque deposit technology might have reduced operating costs, it is doing so only by compromising the bank’s goal to improve customer satisfaction.

The notoriously circuitous phone trees used in call centers is another example of a technology gone awry. By reducing the number of calls going through to live operators, phone trees save employee costs, which explains their popularity amongst adopters in banking, telecom and a few other industries. On the other hand, I’ve lately come across many services (such as phonolo, Bringo! and iPhone Direct Line) that help callers bypass phone menus altogether and connect them directly to a human being on the other side – “Deep Dialing” as phonolo calls this. Judging by their increasing popularity, it is evident that phone tree technology hasn’t improved customer satisfaction. I won’t be too surprised if somebody told me that it has actually led to higher customer churn!

With the threat of recession looming over many developed economies, banks, retailers, telcos (and many others, for that matter) are going to be able to justify their ever-increasing technology spends only if their service providers and technology partners can come up with newer technologies, alternative value propositions and innovative implementation approaches that do not force them into a tradeoff between one business goal and another.