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Q & A: What is Digital-Performance Management?
John Van Siclen and Jason Pontin discuss an emerging approach that provides business and IT stakeholders with a better big-picture view of their digital customer experiences, ultimately helping their organizations gain competitive advantage in a fast-changing marketplace.
EDITOR’S NOTE: In this Q & A, John Van Siclen, CEO of Dynatrace, speaks with Jason Pontin, editor in chief and publisher of MIT Technology Review, about the growth, benefits, and challenges of digital-performance management (DPM). Transcribed from a video interview , the Q & A has been edited for clarity, length, and editorial style. The following conversation picks up after Dynatrace CEO John Van Siclen defines DPM as an approach “specifically targeted at helping businesses transform from their current business environments into the digital age.”
JASON PONTIN: I’ve heard that many companies, if not most, are becoming digital organizations. Essentially, it sounds as if Dynatrace helps manage that transformation. Do most business leaders today think of that as a opportunity or as a challenge fraught with peril?
JOHN VAN SICLEN: Today, most of them that have embraced digital transformation and digital business see it as an opportunity—a huge opportunity, actually. Nike has more software developers now than they have apparel designers. GE has more software developers than line workers. The CEO of GE has talked about [how] if you’re not going to be a software company in 10 years, you’re going to be out of business.
Executive Brief: Closing the Customer-Experience Gap with Digital-Performance Management
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So companies understand it. Leaders understand it. They see this as a big opportunity. But if companies delay, I’m sure it will flip. A couple years from now, [they will see it] as a challenge.
JP: What are the obstacles in moving toward being a more digital business—or to at least avoiding digital disruption by a competitor?
JVS: The biggest thing about transformation is that it usually comes from the top, and it’s a cultural change. The businesses that are succeeding, from what we see, have figured out they have to master three key disciplines, all at once and as a team.
[First,] the business side has to really understand the user experience and behavior of user journeys. They have to be flawless. [Then,] from a production standpoint, the operation of the application platform itself needs to be modernized [and] very agile…hyper-elastic and hyper-dynamic in the ability to respond to different workloads and user scenarios. [Finally,] development has to be part of it, too, because that’s where you take an idea and turn it into something that users experience on the other end.
So it’s really that whole team environment that needs to be optimized, and to do it, you need a platform that helps you manage that team dynamic.
JP: If I’m the guy reporting to the CEO who’s driving this digital transformation, or if I’m the CTO or CIO of a company, and I’m already engaging in monitoring and managing the digital customer experience, why do I also need DPM? What benefits does DPM add that I don’t get from what I was already doing?
JVS: The digital-performance management idea combines two different things. One is how the applications actually perform from a timing and responsiveness standpoint. Some people have that instrumented properly from the outside in. Most don’t; some do. But the other half of it is the business performance. How many users? What’s their performance and what’s their conversion rate? It involves really understanding that intersection between what used to be IT and the business itself.
JP: You make it sound like DPM almost acts as a bridge between the IT and the business side, which very often act in silos in an organization, without enough insight into each other’s activities. Tell me a bit more about how DPM helps solve that “silo-ization.”
JVS: The challenge has always been that there’s no common language, no lingua franca. The business talks one language and the technology team talks another, and they’re really quite different. When you introduce users, and the experience and behavior of users, and their ability to actually get done what you’re hoping they will get done through the application, it changes the dynamic.
We’ve actually introduced a score, a real-time calculation of user experience for every tap, click, swipe that they do, every journey that they make, so that the business and IT can connect with that lingua franca. It’s amazing what’s happened. We have a [client] cosmetic company down in Brazil—the largest one, actually, in Latin America—that’s totally changed the way they do IT. It’s all around user experience from the outside in, and that’s how the IT team is measured.
For the first time, IT has a chance to really make an impact at the business level—to not just keep the lights on, but to actually impact business and revenue in this new digital age.
JP: So the CIO and IT actually becomes significant strategic players in the company’s business performance. I loved your example of the cosmetics company. Can you give me another example of DPM in action?
JVS: Sure. We have a very large number of e-commerce companies in our portfolio, and they all are thinking about Black Friday [the high-volume shopping day immediately following Thanksgiving]. They’ve all made their changes; they’ve all thought about their portfolios and what the applications going to look like. They have some new channels, some new ideas.
How do they know it’s actually going to scale when Black Friday hits and they jump 100 times over their normal volume? How do they know that the new paths through their site, which they want to optimize, are really going to be optimized at scale? These are the kinds of things that we help with. Then, during those [peak-loading times], you really need to understand the degradations as they happen, in real time, because you’re trying to take care of them, resolve them before users are impacted. At that point, it really is revenue, it really is [about customer] loyalty. In this day and age, when people have a problem, they complain. And they don’t complain to their friends, they complain online and broadcast it.
JP: So how should [companies] get started? What are some of the best practices for beginning to organize your company around DPM?
JVS: It’s a lot easier than most people think. The way we start with most companies is to just ask: “What’s one of your most important digital applications that actually influences revenue in one way or another?” For a logistics company, it might be tracking bar codes and things like that. In a retail company, it’s obviously [an application driving commerce]. Whatever that application is that drives digital business, let’s just instrument it.
Then you can really see how everything works under load. The business [team] gets their insights, production gets their insights, the development team gets their insights. We get them all in a room and it takes on a life of its own. Once you have one success, it’s very quick to move to others. In six to nine months, we’ve taken companies from not really understanding how to spell “DPM” to being masters at it.
JP: Still, John, it sounds like this is a cultural transformation for many companies. How should a CEO manage and drive and encourage that cultural shift?
JVS: Many companies are pretty far down the path of identifying an individual to manage user experience, or to set up a chief digital officer, a new C-level position, totally focused on digital channels. That’s one of the first ideas: there’s a commitment to this. The second part is getting involved and starting to move forward. That’s why we usually break it down into a first step, a second step—crawl, walk, run, if you will. And it moves quickly because we’re all users of the technology. We all carry smartphones around. We understand. Just watch our kids and how their tolerance [for a poor digital experience] is even less than our own. It isn’t a big leap to understand how powerful performance is as a key characteristic in driving revenue or loyalty or brand around digital channels.
JP: So, finally: How can businesses develop effective digital strategies and plans?
JVS: First, make sure that you partner with somebody who really understands what it takes to do it. A lot of people talk about their products or their abilities, but very few actually do it. I always recommend a test drive. You don’t buy a car without one. Why would you ever trust something like this, with your most important applications that are really driving your business future, without test driving and making sure that what someone says they do, they actually do?
Second, have a bit of little patience, because it is a journey to mastery. You’ll get the first successes and you keep moving, but to master it consistently, predictably, with confidence, is a different challenge. So have some patience. It doesn’t take more than a year, but it does take more than a couple of weeks.
As long as long as you put those two pieces in perspective—the test drive and that it’s a journey—things seem to work pretty well. We have 8,000 customers and they’re all quite successful with their digital channels.
JP: Congratulations on helping them with that digital transformation.