What are the top technologies that are central to running today’s digital businesses? Any complete list should include the ERP in all businesses, well-managed CRMs in many firms, and ecommerce, content management (CMS), and marketing automation platforms in most companies. Such a list could also include portfolio management platforms in financial service businesses, point-of-sale platforms in retail, and electronic health record platforms at hospitals. So, what is the CIO’s role in selecting a CDP?
CIOs should plan to add enterprise customer data platforms (CDPs) to their agenda.
All of these platforms support running the business, adding customers, analyzing performance, and enabling decision-making. But only CDPs are truly designed to centralize customer and prospect profiles and their journeys, activities, and events across hundreds of platforms. CIOs should take a primary role to discuss the need for CDPs, the growth opportunities CDPs enable, and the due diligence on the scalability, security, and flexibility of customer profile data solutions.
Prioritize CDPs in Digital Transformations
CIOs driving digital transformation should be leading the discussion with their business peers on the strategies, goals, and targeted business outcomes around technology, innovation, and data-driven capabilities. Top CIOs, chief digital officers, and chief data officers should look at market and customer-centric use cases first – the opportunities to target new markets, pilot new products, and improve customer experiences. Targeting growth opportunities first and efficiency second enables business model evolution, helps business leaders shift away from legacy business practices, and paves the way for investing in quality improvements, automations, safety, and other operational needs.
And CDPs may be the most important martech investment for organizations targeting multiple markets, building new product capabilities, improving customer loyalty, and expanding to new geographies.
Targeting growth should start with the marketing and product development teams. They require experimentation capabilities to target, test, and evolve marketing campaigns, aggregate data from multiple martech platforms, and enable real-time decision-making to tune campaigns. Personalizing customer experiences in ecommerce platforms, content management systems, and proprietary applications requires a centralized customer profile to support their recommendation engines and other machine learning algorithms. CDPs also become strategic analytics platforms for centralizing first-party data, and can be used to identify growth markets, redefine customer segments, and alert on customer retention risks.
While CDPs should drive marketing, product development, and the ongoing evolution of customer-facing applications, they are all instrumental in sales and customer support functions. We want employees in sales and support to access an up-to-date customer profile even though customer activities and interactions occur across a myriad of apps, third-party platforms, and real-world experiences.
Demonstrating the value starts by acknowledging that customer data has, and always will be, captured and managed across disparate platforms, including social media, and someday soon, the metaverse. Because growth should be the primary driver of digital transformation, having a centralized customer data platform becomes a top strategic investment.
Spearhead Discussion on Architecture and Integration Requirements
Once a need for centralizing customer data is recognized, CIOs should expect and be ready to oversee the internal debate around the overall architecture. In my experience, the debate often touches on the following questions.
Should all customer data get aggregated in the CRM?
CRMs were often sold and sometimes implemented as the central data warehouse for all customer profile data, workflow, and activity. Over time, this proved unrealistic, because enterprises often have multiple CRMs for different businesses, products, geographies, or as a byproduct of M&A activities. Furthermore, integrating customer activity is a monumental task, and according to one study, the average enterprise uses 1,295 cloud services, including 120 in marketing and another 69 in CRM. CIOs looking to use a CRM to aggregate all this data need to consider whether it can efficiently integrate robust and scalable integrations across hundreds of platforms.
Should the organization use a DMP as a CDP?
Marketers using data management platforms may challenge CIOs to use them for centralizing the enterprise’s first-party data to better support advertising and other marketing needs. But there are downsides to centralizing customer profile data on DMPs, as DMPs can’t store PII data and can’t help their customers differentiate. While DMPs are good at complimenting your customer data, the same information can be retrieved by any customer of a DMP, so it is not unique.
Should the organization invest in an MDM or develop a proprietary customer data warehouse?
Chief data officers may translate CDPs as a master data management problem and recommend using these platforms in conjunction with data lakes, dataops, data streaming, data catalog, and other data quality platforms. But CIOs will quickly recognize the complexities in acquiring multiple technologies, building capabilities, and integrating platforms. The build-it-yourself approach is likely to be a longer, more expensive, and harder path than looking at CDPs that support many of these built-in data management capabilities.
CIOs should lead a CDP vendor selection by reviewing the business opportunities, integration needs, compliance factors, and technology capabilities that factor in architecture and platform decisions. CIOs should also consider several tech buying personas in their organization, some who may overanalyze and slow decision-making, others who seek to buy without sufficiently reviewing the integration, compliance, and other scalability challenges.
Oversee CDP Platform Due Diligence on Security, Scalability, Privacy, and Compliance
CDP’s must live up to their primary objective of becoming the centralized data platform for customer data. This means CDPs must scale to support scalability and compliance requirements, which could mean ingesting millions of rows per second and having processing rules and controls to support SOC2 Type 2 audits.
A security review should ensure that the CDP meets infrastructure-level encryption, data archiving, audit, and other compliance requirements. Does the platform have ISO/IEC 27001 certification and have AWS certifications for SSAE 16 and PCI compliance? CIOs and CDOs will want to review how the CDP meets data governance policies and have flexible organization, region, and role-based permissioning.
Critically important is that the CDP should have built-in data privacy functions to ensure compliance with GDPR, CCPA, and other regulations. The CDP should support a variety of consent management functions by channel, region, and timeframe. A CDP’s data catalog should tag PII and other sensitive data. Most importantly, the platform provider must prove they are a trusted partner and advise business leaders, upgrade platforms, and provide guidelines as privacy regulations change.
When you consider the growth opportunity, integration challenges, and compliance factors in centralizing customer data, I believe CIOs need to prioritize this investment, lead stakeholder engagements to define requirements, and oversee architecture and platform reviews.