Customer insight cannot be outsourced.

Research commissioned by Detica, has revealed an overwhelming rejection of the idea that sight--the management and exploitation of customer data--is a business capability that can be outsourced in the same way as the trend for dealing with other, more commodity, business capabilities, such as certain call centre operations. Options for managing the customer insight capability can be defined on a spectrum, ranging from a third party owned and managed solution at one extreme, to a fully client-managed solution at the other. The middle ground is represented by the use of a combination of both client and partner resources. The majority of respondents operate at the client-managed end of the spectrum, with 93% believing that their current approach was not in the traditional outsourcing domain. The research--which polled 200 senior CRM and marketing decision makers in FTSE 1000 companies across the telecommunications, financial services, utilities and commercial sectors--found that just 5% describe their existing set-up as an outsourcing arrangement to a third party, operating off the customer premises. Even fewer--2%--have insourced that capability to a third party operating on its own premises. Significantly, respondents are generally not looking to change their existing arrangements--63% have stated they are not likely to consider an alternative.

The few examples there are of outsourcing or insourcing customer insight, indicate that there are a whole host of other challenges far higher up the agenda for those adopting such arrangements. These include data quality issues data protection compliance, resourcing, reporting and measuring campaign performance.

Where respondents actually have relinquished control and ownership of their customer insight capability to a third party, there is conclusive evidence to show that the future trend will be to move the capability back in house, with the empowerment of their own resources. These findings ratify the widely held belief that an organisations most valuable business asset is its customer data. This should not be handed over to a third party.

Cosourcing--where a third party appoints a systems integrator to build a customer insight capability, jointly run and managed with the client who takes full control after a period of knowledge transfer--appears to be gaining momentum in the market place.

Cosourcing allows companies to stay in control of their customer data whilst bringing in the specialist skills and technology to extract real value from it. From the research, 90% of those currently using third party expertise cited the availability of key skills as being an important consideration when using an external organisation. Cosourcing allows the best technology solution to be established, whilst the specialist skills the organisation may lack, are developed internally. Following this, the client can fully own and manage its customer insight capability.

Some aspects of customer insight are difficult. This is reflected by low levels of satisfaction within organisations about their own ability to create the single customer view, or perform really elective predictive modelling, customer segmentation or profiling. Companies have seen the dangers of wholesale outsourcing but, at the same time, are utilising specialist knowledge from external partners to augment their in-house, teams. Cosourcing offers a cost-effective approach, bringing in the core skills and technology that companies need in order to thrive.

Source:

'Managing your Customer Insight Capability and the Drivers for Change--Client Managed, Cosourced, Insourced or Outsourced'

www.detica.com