April 9, 2020
Customer experience is a primary competitive advantage. Gartner found that more than 2/3 of companies compete primarily on customer experience which is up 36% from 2010. Even one bad experience can cause a customer to jump ship and work with a competitor. In fact, 72% of consumers will abandon a brand after just one bad experience, according to a recent survey.
There are myriad ways of improving customer experience—from collecting and analyzing consumer data to delivering personalized content—but all this heavily relies on IT infrastructure that is properly architected to undergo digital transformation or optimize the exchange of data. McKinsey & Company found that digital transformation, with a focus on customer experience, can generate a 20-30% increase in customer satisfaction and economic gains of 20-50%.
IT infrastructure can foster outstanding customer experience by enabling digital transformation, optimizing data exchange and powering sustainability initiatives.
Why it’s time to rethink your IT infrastructure
The digital economy is remaking both private and public enterprises across all industries, transforming how they create and deliver value. In order to succeed, companies must operate ubiquitously and on-demand while leveraging real-time intelligence to deliver an exceptional experience to customers across all channels. This presents challenges around undergoing digital transformation with barriers caused by data gravity. This is forcing IT to move away from a centralized infrastructure strategy towards decentralization in order to remove those barriers and accommodate distributed workflows no matter where customers are located and what their specific needs are at any given time.
To deliver an exceptional customer experience, companies must address global coverage, capacity and ecosystem connectivity needs by integrating the physical and virtual worlds within proximity to centers of data exchange. This will require rethinking their IT infrastructure with a decentralized approach.
Data, data everywhere
Enterprises are experiencing an ever-increasing influx of data. In 2019, the world collectively spent an estimated 1.2 billion years on the internet. Netflix alone generated 5 million GB of data every day which translates to almost 165 million hours of time spent on Netflix in a single day. By 2025, it’s estimated that 463 exabytes of data will be created every day (1 exabyte = a billion gigabytes).
In the not-so-distant past, data was created in a centralized location, which brought users or systems to the data. Now, data creation is ubiquitous and everywhere thanks to technology like the cloud, IoT, social, mobile and analytics. Data is being created on our smartphones, inside buildings, inside our homes, and in our cities. It’s everywhere.
As data sets become larger, they become more difficult to move due to a concept called “data gravity,” which was first coined by Dave McCrory. Applying the laws of physics, data and applications are attracted to each other thus creating clusters of centralized data that become impossible to move. This will cause unfavorable complexity for global workflows with consideration to locations, proximity to users, regulatory constraints, compliance, and data privacy. Companies can’t afford to compromise their customers’ data with nearly 87% of consumers saying that they’ll take their business elsewhere if they don't trust a company to handle their data responsibly.
Break through data gravity barriers
Considered as the single biggest challenge for digital transformation, data gravity presents major obstacles to delivering an enjoyable and secure customer experience. By keeping data clustered together in a centralized location, it becomes difficult to move as it grows and will cause increased latency and throughput issues. This can easily translate to an unpleasant customer experience, whether it’s waiting too long for a page to load or an order to be processed, trouble accessing an application from another country, or being served irrelevant information. These experiences can be instant deal-breakers for customers. As companies scale on a global level, it’s important to move towards a decentralized model that frees up this data to move around more flexibly, delivering an integrated, enjoyable and personalized experience that will build customer trust and loyalty.
Gartner predicts that, by 2022, more than 50% of enterprise-generated data will be created and processed outside the data center or cloud. In order to operate ubiquitously and on-demand, augmented by real-time intelligence to serve customers across all channels, business functions, and points of business presence, IT must re-architect towards a decentralized infrastructure which removes barriers due to data gravity and allows data to be optimized. This will also allow for more real-time analytics to deliver a more personalized and custom experience to keep up with user expectations. In fact, 76% of consumers expect companies to understand their needs and expectations.
Centers of data at the center of customer experience
The changing IT landscape has created the need for data centers to undergo their own digital transformation. Gartner predicts that by 2022, 60% of enterprise IT infrastructure will focus on centers of data rather than traditional data centers. Locating data adjacent to network ingress/egress points is a major factor in reducing latency. This can happen by solving for data gravity barriers by leveraging a network footprint that allows for traffic to be aggregated in and out between the public internet and the private enterprise.
Maybe even more important than latency is mitigating security breaches. In a 2019 survey, 81% of consumers would stop engaging with a company after a security breach. In order to get out ahead of security breaches, companies must have the ability to place security infrastructure in a secure facility adjacent to where the network traffic flows in and out into a specific region or zone or country. Whether in public or private clouds, strategic IT infrastructure must be able to aggregate and maintain data from the core to the edge and across every point of business presence to control centers of data exchange.
Undergo digital transformation or be left behind
It’s no longer a question of “if” and “when” IT leaders should undergo digital transformation to be able to weather this data storm; the majority of companies acknowledge the importance of digital transformation and the need to implement ASAP, yet only 3% have implemented enterprise-wide digital transformation.
No longer seen as just an IT initiative, digital transformation is being widely accepted by enterprises as the key to innovating their operations and achieving ambitious business goals. However, one of the biggest obstacles for companies trying to implement digital transformation is the lack of clear data to prove ROI. This is a challenge that stakeholders will need to navigate in order to assess the long-term value of making this type of investment now to avoid irrelevance or worse, spending even more money, time and resources trying to play catch-up in meeting evolving customer expectations.
Successful digital transformation depends on ensuring IT infrastructure meets the needs of the modern business, operating ubiquitously and on-demand with the ability to scale globally as customer needs evolve. Nearly half of companies are prioritizing their digital transformation investments starting with their IT infrastructure.
Sustainability matters to customers
Now more than ever, consumers demand transparency when it comes to the production behind what they buy. Considerations including factory locations and employee-labor laws to how food is being sourced to an organization’s carbon footprint are top of mind.
Once seen as a forward-thinking competitive advantage, sustainability has now taken center stage by becoming a corporate strategy pillar for businesses across nearly every industry. According to a 2019 study by CGS, sustainability ranked 2nd right behind “better quality” for what makes consumers loyal to a brand. Sustainability has become directly linked to customer experience as more consumers are prioritizing the corporate social responsibility of companies they buy from.
Overall, 66% of consumers consider sustainability when making a purchase while 35% of consumers are willing to pay 25% more for sustainable products and Gen Z consumers are willing to pay 50-100% more.
By 2025, it’s predicted that nearly 25% of the world’s energy will go towards digital services with data centers making up a significant portion of that. The majority of companies’ environmental impact starts within their supply chains which are often directly linked to their data center providers.
Earn customer trust by considering these energy management tactics for your it infrastructure:
Certified plans and resources
Ensure that partners are certified with reputable organizations like ISO 50001, Energy Star, LEED Green Gloves, or one of the other geographically-specific certifications.
Maximizing power usage effectiveness
Typically, energy is being fed to users regardless of power usage. PUE allows organizations smarter buying and selling of energy.
Water cooling is on the rise for hyperscale cloud operators and concerns have increased over potable and renewable water sources. Ensure that partners are being responsible with liquid sourcing.
Big players have been working towards 100% renewable energy to match consumption. Data center partners should be as committed to wind, solar, biomass, geothermal or hydroelectric power to reduce carbon footprints.
Conclusion: IT and customer experience go hand-in-hand
Customer experience is no longer a nice-to-have but a necessary strategy to achieve a competitive advantage and keep up with consumer expectations. A company’s IT strategy sets the foundation for delivering an exceptional customer experience for end users while also future-proofing for demands and needs that may not even exist yet. IT must re-architect towards a decentralized infrastructure to remove barriers caused by data gravity and thus accommodate distributed workflows no matter where end users are located and what type of information and applications they’re trying to access.
Further explore the top infrastructure challenges IT leaders face today and what factors contribute to their success based on a survey conducted by 451 Research in their report: The Infrastructure Imperative—Optimizing Data Exchange to Ensure Global Digital Transformation.