In 2014, the head of RBS famously said that their bank’s busiest branch was the “7.01 [train] from Reading to Paddington.” The witticism spoke to a very real trend most financial institutions were starting to deal with in those years: most of their customers preferred engaging with them through an online banking app while commuting, rather than by walking into a brick-and-mortar branch.
In retrospect, that might have just been the start. In the long run, the digital paradigm will shift even further, and companies will need to start thinking of themselves as existing in a “three-dimensional” environment. Customer experience will stop being only about the interplay between an application and a customer’s device: thanks to 5G and next-generation WiFi, a customer’s surroundings will also become an essential element of their experience. Imagine for example how different your experience in an airport could be if it were more intelligent. Then, every time a traveller steps into a terminal, the airline application on their smartphone would automatically connect to the airport’s network to provide a three-dimensional experience: suggesting the quickest route to the check-in desk, showing special offers and discounts for the airport shops, alerting the passenger when it’s time to board, and instructing the in-flight entertainment to display a user’s favourite movies once they are sat in the plane.
We are not there yet, but we are fast approaching that scenario. The digital-first model has caught on at a staggering scale, changing the face of whole sectors – from banking to retail – beyond recognition. At the core of this momentous shift is the rise of software applications, which are effectively transforming every business in to a digital business. According to Danny Winokur, General Manager at AppDynamics, a Cisco company and the world’s largest and fastest growing application performance monitoring vendor, applications have gone from supporting a business to being the business.
“The role of the application inside large enterprises has gone historically from being a support system for how you internally run the business more effectively – think of the ERP or CRM system, which were applications used to run the back-end or the internal operations of the business – to now very much becoming the gateway to the customer,” he says.
“They are, in fact, the embodiment of the business itself and the way that the core products of the organisation are delivered to its customers. And that fundamentally changes the role of the application.”
This has numerous consequences. One is purely technical: companies, regardless of sector, need to reorient themselves internally to focus their energies on their digital sides. What was once the preserve of a small team of IT professionals has now turned into the heart of the business, meaning that “the business team, marketing teams, the development team, the operations team, all must work together within and around the applications,” Winokur says.
But the key consequence is that the battle to acquire and retain customers is being fought on new turf – and that is digital user-experience. “That is the new competitive playing field companies are competing on,” Winokur says.
According to Gordon Thomson, Vice President of Global Sales, Intent Based Networking at Cisco, most customer-facing applications are about making transactions easier. While that amounted to a seismic shift in the early days of e-commerce or online banking, today it is pretty much standard fare.
“That form of digital transformation ultimately has a glass ceiling. There’s only so much you can digitally transform a transaction,” Thomson says.
“Where the world is moving to in this new decade is around how we use the application to provide not just the ability to transact, but the ability to improve the experience for the customer, the supply chain, the employee. The digital currency for the next decade is all about experience, and the ability to harness experience to drive revenues, and to drive stickier relationships with customers.”
In other words, what most companies should be focusing on right now is not only embracing digitisation and launching their app – it is creating an app that provides a customer experience superior to all its competitors’. The stakes couldn’t be higher: according to a survey AppDynamics conducted in 2019, 54 per cent of consumers are now placing a higher value on their digital interactions with brands than on their physical interactions; 66 per cent of consumers also said that they would stop using a brand if they had a poor digital experience. And 83 per cent of respondents said they would not let a company know if they had had a bad digital experience.
The consequences of these figures are myriad. One is that companies need to constantly monitor the performance of their applications.
“Having visibility into what is going on across all of the individual sub-components and subsystems that have to work together to deliver the application experience is absolutely paramount, so that you can take corrective action before a long period of interruption or outage.” Winokur says. “The business impact of those incidents is greater than ever.”
But incidents and catastrophes are not the end of the story. What will increasingly matter is the ability to tweak and fine-tune one’s digital product almost in real-time to maximise customer satisfaction. “To have a high velocity of change and improvement, to make the experience ever better – that will become a new competitive currency between companies,” Winokur says. “If you can move faster by iterating the experience in your application, you get to deliver a winning experience more quickly. The Amazons, the Facebooks, the Googles of the world pioneered this approach.”
The objective, in short, is to adopt a data-driven approach in order to spot what could be improved in an application. “Instead of updating an app every six months, you update an app every day,” Winokur says.
Another crucial development is that companies will start thinking in terms of “three-dimensional” experiences, such as the future airport we envisioned earlier.
“It’s the interconnection of application, device and network taken together that I believe will be the game-changer for organisations in terms of how they drive digital transformation for their businesses in this next decade,” Thomson says.
Designing these kinds of products will be invaluable not only when it comes to attracting customers, but also internally within a company. Employees’ devices will be equipped with applications that work in concert with their coworkers’, and with the office where they are based.
“The role of those applications internally will be to drive improved productivity, better collaboration amongst employees and to provide a frictionless experience,” he says. “We’ll get to a place where I walk into a room, and the room, and the application, and the device work out between them why I’ve walked in the room. And then the room would potentially change the heating because it knows what my requirements are.”
As the scramble for millennial talent kicks off, Thomson says, “creating these sorts of environments will be game-changing for businesses.”
For more information on how Cisco is approaching applications for business click here.