6 Questions – and Answers – about Punta del Este

By Robert L. Scheier

Only three weeks into the New Year we’re awash in analyst predictions about what new capabilities CIOs will need from service providers. Three areas that keep coming up are mobile app development and testing, big data (analytics), and social media (using content created by customers or employees to drive sales and other benefits).

I predict customers will want more help in mobile and big data than social media. Here’s why.

Many service providers have the programming skills to create good-looking mobile applications, and to test them – maybe with the help of a crowdsourcer. But knowing which mobile apps to develop, and the design that will appeal to a particular geography or culture, will require closer cooperation (and maybe even some onshore presence) for a service provider to get right.

Helping an organization craft a mobile strategy provides even more value, but is more challenging. Many retailers, for example, are battling “showrooming,” where a customer examines a product in a store but buys it for less online. I can imagine a service provider designing, for example, an app that detects these real-time price comparisons and offer an instant discount or combo offer such as an extra warranty or accessory if the customer buys on-line. But that requires a level of retail experience not every service provider will have.

Which brings up the second hot area: Big data, which means the rapid analysis of extremely large datasets to detect problems or opportunities. Service providers have been offering business intelligence (analyzing sales or other data to guide decision making) for years. What’s different about Big Data is, well, how big it is and how quickly the organization must react. Business intelligence might have required reviewing sales by product category such as food or men’s clothing every week, Big Data might require capturing, analyzing and acting on every on-line price search from every customer in every store as it happens.

Service providers can help with Big Data if they have, as many do, deep strength in technical areas such as database design and high-end analytics. Just as with a mobile strategy, it’s even better if they have deep retail expertise. But how many service providers also have the deep, current understanding of how consumers in a bandwidth-rich country such as Korea or Japan “showroom” vs. a country such as the U.S. where mobile broadband is newer? And would you as a CIO turn first to a global services provider or to a niche consultancy for help with that?

Which bring us to social media. IBM recently launched a new effort in this area, with a big focus on educating businesses on how social medial can help them. The fact social media is so new is one reason why CIOs are less likely to turn to global service providers for help than with mobile or Big Data projects. The culture, training and hiring of many global service providers are built around providing standardized, repeatable and established functions such as invoicing, accounts payable or help desk at low cost and high quality.

Social media, on the other hand, is still rapidly evolving (hence IBM’s focus on just explaining it to people.) It’s also all about quality content, which is an editorial (rather than a technical or business process) skill which is not a core competency of the average service provider. Finally, social media requires a lot of real-time commenting, sharing and linking of quality content using culturally appropriate terms. Again, it’s not the easiest thing to outsource.

So in 2012, I expect mobile development and testing are no-brainers to outsource with big data analytics a strong second, as long as the provider also has some vertical market skills. But social media will be a much tougher sell. What’s your take?