There is a ring of truth to the introduction to Digital Clarity Group’s (DCG) latest research on European web content and customer experience servicer providers — even if it is a little dramatic. In it, Scott Liewehr, president and principal analyst at DCG, stressed that this is the age of digital disruption,.
Organizations have to transform they way to work or die, he continued.
He's not the first person to make such an argument on behalf of customer experience and engagement (CEM) vendors and service providers. But he is among a minority that can support his argument with research on 45 companies.
Technology Isn't the Answer
Liewehr, whose comments appear in the introduction to the Guide to Service Providers for Web Content and Customer Experience Management – Europe, argues that while businesses are being challenged on a daily basis by the need for transformation, these challenges are being compounded by technology.
It's not just a problem with technology, he noted, but a problem about the way organizations approach technology. He claims vendors, analysts and end users have a myopic focus on technology, noting "More software only means that more emphasis must be placed on finding the right partners to implement and integrate the technologies and to assist with research, analytics, business strategy, and other services for a complete solution.”
To find out more about the report we asked Jill Finger Gibson, principal analyst at DCG and one of the European report authors, about the main findings and trends.
Based on months of interviews and surveys, the report provides a comprehensive analysis of the European landscape of digital and interactive agencies and systems integrators. According to the research, a service provider (SP) is:
Any company that provides services and/or products in support of initiatives, ranging from user research, design, and business strategy to technical implementations and custom coding within the context of CXM and CEM (customer engagement management) projects."
Offering an analysis of 45 providers across Europe, it follows the August release of a similar study on the US market. Combined, the two reports provide a comprehensive view of the web content and CXM space globally and how it is being served by service providers. Among the subjects tackled are:
- Web content management and customer experience-related technology partnerships
- Specific areas of expertise and vertical industry specialization
- Projects completed for European clients
- An overview of service providers project approach, from initiation to post-implementation
- Common practices in pricing, employee training and education, and internal knowledge sharing.
It is also worth noting that service providers themselves have identified their companies according to one or two of the established categories including: advertising agency, digital agency, marketing communications agency or systems integrator.
Change in Perspective
There are a number of findings in the report that both vendors and potential buyers should be aware of, according to Finger Gibson.
She said the relationship between businesses and their service provider partners are changing rapidly at the moment, but it is not the technology that organizations are finding difficult. Rather, it is the organizational changes that accompany the development of new technologies that is causing difficulties.
She also noted that the service provider market is starting to consolidate and that this trend will continue for the rest of the year.
The result is that while it is necessary for customers to have a long term vision of where they want to go, service providers need to provide these customer with a practical step-by-step guide to achieving that vision.
Behind all this is a major shift in the relationship between service providers and their customers, Finger Gibson said. CXM is not just something that the marketing department looks after, but something that everyone needs to be involved in.
Service providers – digital agencies, as well as systems integrators – report that they are starting to see savvier buyers who come increasingly from the top ranks of an organization, rather than from individual lines of business. These new buyers have a strategic mandate to improve customer experience, which is coming directly from the CEO or equivalent," she said in a blog post on the findings around the US and European report.
The result is a change in the way companies are thinking about their organizational structure. The first step in this process is that more cutting edge or forward thinking companies are appointing senior executives that can bring together the physical and digital worlds.
Digital Clarity European Service Providers Report
But once you make changes at one level of the organization there is an knock-on effect across the entire organization, as well as on partners and service providers.
Citing the example of former Microsoft CEO Steve Ballmer, Finger Gibson points out that when he outlined the new One strategy last year, he also outlined the creation of a centralized marketing group which subsequently decided on the revaluation of its agency relationships.
With enterprises pulling their different products and divisions into a more unified structured to improve customer experiences, a lot of the bigger players will be identifying where they need to start filling in holes and how they are going to do that.
As businesses look for partners that can wrangle their own diverse products and divisions into a more unified structure to improve on the experience they provide to their customers, M&A amongst service providers is expected to accelerate. Currently the market is complex and fragmented. In our service provider interviews, a frequent response to the question 'who do you see as your main competitors?' was 'It’s complicated?'"
With this disruption and consolidation of companies and the changing nature of their relations with service providers as well as the move by service providers to develop their scale and capabilities, the entire CEM landscape is about to change. This will manifest itself in three different ways:
- Software vendors: The shake-up will mean more opportunities for increased sales as CEM and CXM initiatives increase in size across all geographies.
- Service providers: Finger Gibson said this is the time to invest in developing and identifying where exactly you need to be in three years.
- Buyers: While it is a good time to be looking at investing in new technologies, Finger Gibson added that vendors need to carry out due diligence on future partners and how they will advance the company’s goals.
Like the earlier US report, DCG has made it clear that this report isn’t a rating of service providers. It's more of a listing of capabilities of 45 European service providers who work in the web content management market. DCG focused on web content management service providers for this report because they believe it's at the core of all CEM strategies.
Digital Clarity European Service Providers Report
The US report also acknowledged that that the service provider landscape is both large and shifting. Four types of providers are defined in the report, but many providers see themselves fitting into more than one category.
It is clear that no one size or type of service provider will meet every need, especially with so many different components making up a CEM project. It is also impossible for one provider to offer everything needed, or offer advice on where buyers should go to fill out the missing pieces.
Both the Europe and US report covers many of the bases here as well as providing an overview of what service provides are offering what products in different geographies, especially with some of them straddling both the European and US markets.