The ‘trust imperative’ for CIOs

Profile picture for user kmaciver By Kenny MacIver May 8, 2013
Summary:
IT leaders like Jeroen Tas of Philips are being challenged to create a strategic vision for how their organizations can exploit the vast amounts of customer data becoming available to them through big data initiatives – while instilling and growing customer trust.

Jeroen Tas, Philips

Whenever he gets deep into the subject of the ‘trust agenda’ that has landed on CIOs’ desks, Philips’s global head of IT, Jeroen Tas, doesn’t try to hide the sense that he's entering unknown territory.

Some of the core business models driving the €25bn healthcare, lighting and consumer products giant, he says, are being reinvented by a newfound ability to connect – at vast scale – to its historically distant customer base. And, of course, to make use of the data from those encounters.

“Suddenly we are connecting with millions and millions of consumers and patients,” says Tas.

“Our research people are directly connected to customers; our supply chain people are looking at customer data to understand where our products are used and where it's best to distribute them. Such activity presents us with a truly customer-driven view of how to run the entire value chain and a completely different way of creating business models.”

No matter whether those new business models are being enabled by big data, cloud, multi-channel CRM or some other technology mix, the fact is that CIOs are being challenged with hatching strategies that engender real customer trust – how it’s earned, how it’s preserved, how it's grown.

Speaking alongside Tas at Salesforce.com’s Customer Company event in London last week, CIOs, CMOs and industry executives were underlining how the trust relationship with customers is going to be one of the defining challenges of the next decade, as organizations consume ever-larger quantities of information about their customers – with the knowledge that getting that trust relationship badly wrong could seriously impede their future prospects.

That's a sentiment observed by Doug Bewsher, CMO at Salesforce.com. “Discussions with some of our customers show they are struggling with the trust question,” he says. “Of course, every company wants to build a great customer experience. And to enrich that they want to use customer data.” But businesses need to demonstrate that when it comes to customer data they are highly trustworthy, he adds. “At the moment our clients are figuring out how the heck they do that.”

Visible activity

The key to building such a trust profile for many will be to introduce much higher levels of transparency – transparency in the ways they gather, crunch and exploit the torrents of information amassed from social, mobile, transactional and other sources. And demonstrating such transparency to customers will become a badge of corporate good citizenship. Philips’s Tas, for example, wants to reverse historical attitudes of keeping the customer in the dark about what data is held and how it’s being used.

“Perhaps because we are in health and well-being we want to be trusted more in our relationships with consumers. We never want to compromise that.” For example, he would like to see an end to practices where online customers have to ‘agree’ to a set of buried terms and conditions that are couched in pages of legalese. “We want to bring things to the front. Most organizations are today very implicit about the information they’re collecting on customers and how they’re using it. I think we are now entering an age where we have to be very explicit about how we do that.”

Within Philips' management teams, that whole issue is being “heavily discussed,” with a broad appreciation that the stakes are high, especially for organizations that get that trust relationship wrong. “It's quite new, but we believe this is one of the foundations of becoming a digital company,” he says.

Global trust dynamics

Tas is hardly alone in such thinking. Ian Cohen, group CIO at international insurance broker and risk management company JLT, is under similar pressure to reinforce the trust relationship at all levels. “We operate in a highly regulated environment, so trust is vitally important to us. Not just the implied trust in our brand but the trust that actually sits between us and our client and the data. For certain clients, we are a data owner, for others we are a data manager.”

“But trust is challenging for us – locally, nationally, internationally, globally. Increasingly, we are challenged to be explicit about how data is accessed and where data is accessed. So we have to be very, very clear with how we operate with, say, any of our cloud services.  It’s a big issue. And there is more to be done in terms of being even more transparent and even more supportive around data piracy, data allocation and data residency.”

Alienated by residency

Indeed, even as cloud has become a default setting for many application choices, data residency has remained a central trust issue for some. For example, the announcement that cloud market leader Salesforce.com will be opening its first European data center next year in the UK has been painted as by the company as a move primarily designed to tap into potential government business. As Steve Garnett, Salesforce’s chairman of Europe, observes: “We can argue and articulate to the nth degree around the security of our model. Nevertheless, there are regulatory requirements that limit our ability to provide our services to government. For our commercial customers, that [local or regional data residency] is typically unnecessary. However, some may prefer their data to be there.”

Certainly Philips thinks that's a useful option – as does JLT, the Islamic Bank of Britain, and several others with European headquarters which Diginomica has spoken to. “We explicitly requested to have a European data center [for Salesforce], “says Philips’s global CIO, “And we’re quite happy now it’s happening.”

Working through Salesforce’s US data centers has raised concerns at the Netherlands-headquartered company about the potential imposition of export controls to certain countries by US authorities. Tas also expresses concern about the US government’s ability to subpoena information held in US data centers under the Patriot Act. But, in any case, he is under pressure closer to home: “Certain European countries [in which Philips gathers and hold customer data] have a strong preference for that data to remain in the EU sphere.”

Whether such data trust issues are influencing adoption patterns for cloud, big data and other services is a moot point. What is not in doubt – as Salesforce’s chief scientist JP Rangaswami highlights – is that “trust is one of the core revolutions taking place in the digital environment today.”

Exclusive interview: Salesforce.com’s JP Rangaswami on how trust is becoming the new currency for the digital economy