Check out the Digital Factory: Forging engagement through strategy, data, and interaction

Note: Eric Schneider is somewhat different than the other guest posters I've had. I met him through some intriguing tweets he sent me that referred to what he called a digital factory. After some further exploration, I realized that this would be worth putting out there to see what you guys think. While I haven't known him long, I do know that he has a long history in the CRM industry.

Over the years, he's spoken with hundreds of companies about their processes and has seen them go from automating repetitive tasks to leveraging data to engage customers. So the "digital factory" didn't come out of nowhere. I'm really curious about what you all think on this one. I like the idea.

Eric, why don't you explain?

The opening comments of Paul’s blog about random thoughts on CRM and how the customer-facing market is changing keyed some thoughts in my mind. He made the point that some aspects of CRM are becoming operational while others evolve to focus on customer engagement. That felt on the money to me but this isn’t just a new trend. The maturation and adoption of technology is ongoing as each domain crosses the terrifying hump of the “Gartner Hype Cycle” and speeds towards maturity or obscurity.

A commonly known outcome of the Industrial Revolution is the mass production of the Ford Model T. The car itself is less an achievement than how it was produced. The time required to make a Model T was reduced from 12.5 hours to 93 minutes. The workers were specialized, the entire supply chain of the Highland Park factory was optimized and production spread globally. In a similar way, the Information Age leverages technology to continue to optimize companies like Ford’s. Computers automate factories, run the accounting, track orders, enable sales teams, and provide insight into the entire enterprise.

In essence, companies became digital factories fueled by data. Supply chains were automated using data, which yielded cost and agility benefits similar to the mass production that occurred in the Model T plant. Orders were booked and fed into the systems, which expanded on the information available. The tracking and planning available offered companies further differentiation for a time.

Then came the march of sales force automation, CRM in general, and e-commerce, which has continued to supply efficiency and help people respond to demand and customer issues. As each incremental gain was made, more data entered the digital factories to keep the businesses fueled and running properly.

Digital factories continue to grow, especially in industries such as financial services, telecommunications, and retail. Each purchase and phone call becomes another point of data as customers and businesses transact. The growth of online commerce and support has added to the amount of information captured by businesses as they work to digest it all. This has fueled the growth of big data solutions along with in-memory capabilities and engineered systems.

As there is more demand to turn data/raw material into an advantage for the organization, the digital factories have had to grow and advance. This trend has been steadily progressing with improvements and varied techniques for attacking the problems at hand.

There have, of course, been parallel advances while this has been occurring. Customer interaction has undergone a radical shift and now happens largely outside of a company’s walls. Empowered buyers research and share information across a variety of social sites and leave product reviews or blogs to inform others whom they communicate with.

Cloud computing also arose, which dramatically lowered the barrier to innovation for smaller companies with compelling sofware-as-a-service (SaaS) offerings. It also increased flexibility and computing access for traditional enterprises.

What this means is that for the first time, there’s an explosion of both computing and data outside the firewall. In many cases, it’s not even a company producing and processing it in their own factories anymore. There are even businesses such as Airbnb and Uber who arguably don’t even own their own products.

This is where the challenge and opportunity lies. Powering modern customer interaction well requires the right data to be leveraged to orchestrate the right messages in the right place at the right time. The complexity of search, constantly shifting social networks, display advertising, mobile enablement, and content platforms such as video make it harder to rationalize the online world in which consumers live. This has led to cloud-based solutions that are their own digital factories that produce and consume their own data close to the customer. These may help with individual scenarios but if used in silos, then they can fracture the online data. That can make it more difficult to leverage all that internal information which businesses process.

As a result, the challenge is to have an adaptable cohesive interaction strategy that ties the data together as it rolls off the digital factory floor. There are obvious benefits including better activation of all that internal data, optimized media spend, improved messaging uptake, and tighter relationships with customers. There are also other less obvious benefits of tapping into the cloud offerings.

Traditional reporting lets companies measure their own trends. Now they can benchmark against massive databases across industries. In-network information from sites such as LinkedIn and Facebook targets customers much more precisely than calendar-based batch-and-blast methods of old. Customers receive messaging on their own schedules and cadences, not at the whim of a single disconnected person with a Send button. Websites may be personalized based on what a buyer is doing right now rather than an offer batched offline. Entire digital interactions are being orchestrated, which individuals traverse on their own paths.

This progression of new interaction points changing while the old ones become automated will continue and accelerate. As always, businesses that can make the most of their resources will have an advantage…until the next disruptive revolution.