Can You Service The Converged Consumer?

If you believe the hype, digital convergence is leading us to a world where everything is inter-connected. You can now read emails in your car or book theatre tickets from a single PDA.

The boundaries between the Internet, media and enterprises will dissolve and consumers can mix work, their personal life and entertainment wherever they are. Now whether this is a good thing or not is another question.

Divergence Is The Norm For Consumers

The consumer domain has two drivers: the opportunity caused by the blurring of device roles, and the opportunity to take advantage of new technology.

In the past, each device had a single role. Now, multiple devices can be combined. The choice is huge, from Handspring’s new Treo, which combines the mobile phone and PDA based on the Palm operating system, to Compaq’s iPAQ handheld computer based on Microsoft’s CE operating system.

Divergence is also driven by the opportunity to take advantage of new technology. The most influential is the advent of a mobile, wireless and data communications infrastructure.

The number and the physical variations in device form will grow dramatically, driven by these new business processes.

Convergence Is The Norm For Enterprises

In the enterprise domain, convergence is more apparent. This also has two drivers: the need to manage the volatility of the consumer domain, and the need for interoperability between applications and infrastructure.

Because of the volatility of the consumer domain, it’s impractical for the enterprise to support individual devices and channels. The trend is now toward off-the-shelf, best-of-breed applications for specific needs. Of course, XML is a popular interface standard, but there are others. They include Microsoft’s Simple Object Access Protocol (SOAP), part of its .Net strategy, and Sun Microsystems’ Genie.

Consumer Patterns Are Evolving

A new breed of consumer has emerged called “converged consumers”. Consumer market researchers Ross Honeywill and Verity Byth refer to these as I-Cons in their recent book

I-Cons: The Essential Guide To Winning And Keeping High Value Customers, (Random House, 2001).

According to Honeywill and Byth, traditional consumers use a few predictable channels for a single interaction. For example, to purchase a VCR they would typically visit several shops to find out what’s available and to talk with sales reps to establish trust. They might call a friend with a similar product to question its value and ask for advice. When they have decided, they return to the store to pay for and collect the selected product.

By contrast, converged consumers vary their channel combinations. They may use the Web to get detailed information on a range of products, email on-line suppliers and call shops to check availability, use interactive TV to determine value and compare prices, then select the product by email and pay over the Web. The essence of converged consumers is their individuality and their unpredictability. And though they account for only a small proportion of all consumers, I-Cons represent a much higher proportion of overall spend.

The emergence of the converged consumer has caused the adoption rate of new channels to increase dramatically in recent years, but not all channels are taken up. This will eventually erode the penetration of existing channels.

What Is The IS Group To Do?

IS can respond to the characteristics of unpredictable consumers in several ways.

Instead of creating solutions for each device and channel combination, the enterprise can use standard interfaces. Devices can then plug and play. Content and services are held in a device-neutral format and recreated at run time. This is the so-called “liquid content” approach.

The enterprise needs agility to adapt to the changing demands of the individualistic consumer. This requires more flexible working arrangements with business units and external service providers.

A single view is needed to maintain consistency across all channels, on-line and off-line. This means creating a database containing customer details, personalization information and transaction history. Often this forms part of a CRM strategy.

It won’t be practical for the enterprise to respond to every demand. You need to select the information and services that will be supported.

Although there is some evidence of convergence, there’s still a long way to go. The real story is one of concurrent divergence and convergence.

Dr. Marianne Broadbent is Group Vice President and Global Head of Research for Gartner’s Executive Programs.