Although phrases such as digital transformation and customer experience are over-hyped, many organizations are making significant investments in these areas. Such transformation efforts help companies meet evolving customer expectations and (at least) maintain parity with new and established competitors.
Because these shifts usually involve business model changes that rely on technology, Chief Information Officers have moved to the front lines of digital transformation.
One of these CIOs is Walter Curd, Chief Information Officer at the semiconductor manufacturing company, MAXIM Integrated. I spoke with him to learn how a CIO can drive digital transformation and improve customer experience.
The discussion was part of the CXOTalk series of conversations with innovators in business and technology. We recorded the video as part of the SAP Select program, which SAP holds for its largest customers during its annual SAPPHIRE NOW user conference.
MAXIM has $2.5 billion in revenue and about 7100 employees. According to Curd, the company has "over 45,000 active parts, 20,000 customers, we ship billions of units a year. The result of all of that is 65% gross margin, 35% operating margin. Thanks to some of the tax changes, we can return 100% of our cash to shareholders, which makes them very happy, which makes our employees happy because the stock price goes up."
Changing processes to drive customer experience is hard for any business. It's particularly difficult in a business that historically was focused on product engineering rather than customer experience. In these companies, such as MAXIM, changing the business model, technology, and processes goes against an established culture where "engineers are king," as Curd says.
When culture changes, there is a risk of alienating long-standing customers who are comfortable with the company as it has done business in the past. The risk is particularly high during the transition, while the company is still figuring things out. Uncertainty of this type is a primary reason few companies take the initiative to disrupt themselves.
You can watch the interesting video of my conversation with Walter Curd embedded above and read edited excerpts below.
Walter Curd: On the sales side, we've revamped things. We call it a digital transformation, but we've gone heavy into e-commerce. Now, this was a really interesting discussion in the company because we were very traditional. But, we realized that we've been product-focused for so long and, to get customer-focused, we had to own the customers. That meant taking it back from some of our distribution partners. We've put a lot of time into enhancing our website, the analytics, the customers, and so on, and then allowing us to understand the customer experience.
Walter Curd: Yes. If you look at who our customer is, it's a design engineer, which is a completely different experience from a consumer. First, we have to get them there. Then we have to walk them through and make sure it's easy to find what they need. We have simulation tools, obviously the data sheets, the training videos, and free samples.
We understand the journey that a customer, in this case, an engineer, goes through and we've redesigned our website and our selling process around that. So far, we've, in the last two years, each year we've doubled our e-commerce revenue. That gives us a lot more insight to the customer, which, as we know with digital transformation, is critical.
Engineers are king in our company, but we've had to expand our focus on the customer, especially as we have 20,000 of them. The small customers and medium customers that we can't touch directly, we have to touch with our website. You don't know which ones are going to become big customers.
Walter Curd: All the business processes go from these systems over here to these systems over here. The only people that understand the end-to-end process and make it work are IT. What I realized was, if we're not getting better, if we're not executing the right projects, we're hurting the company.
The world has changed, and IT is not a silo anymore. Each business thing is not a silo. It's one process, one integrated system.
Walter Curd: We created a business intelligence organization within IT many, many years ago. The objective was to standardize, normalize, and centralize the key data in the company. Keeping track of those billions of units across all the world and keeping it flowing is a big challenge. But, it's a lot easier if you have a good forecast.
The business may not realize it, but you have to make it happen. Otherwise, you hurt the company.
Disclosure: SAP invited me to SAP Select as a paid engagement, to conduct video interviews with senior executives on topics related to Intelligent Enterprise.