Recent MORI research among FTSE 1000 companies revealed the general rejection of the idea that customer insight (the management and exploitation of customer data) is a business capability that can be outsourced - or even insourced - in the same way as other 'commodity' operations such as call centres.
According to the UK-based IT consultancy, Detica, the options for managing customer insight can be viewed as a spectrum, ranging from a third party owned-and-managed solution to a fully client-managed solution. The middle ground is represented by the use of both client and partner resources.
The MORI survey found that the majority of respondents operate at the client-managed end of the spectrum, with 93% believing that their current approach was not in the traditional outsourcing domain.
Very few outsourced
Having polled 200 senior CRM and marketing decision makers in FTSE 1000 companies across the telecommunications, financial services, utilities and commercial sectors, the survey found that only 5% describe their existing set-up as being outsourced to a third party and operating off the customer premises. Even fewer - only 2% - have insourced that capability to a third party operating on its own premises.
Significantly, the survey's respondents were generally not looking to change their existing arrangements, with 63% stating that they are not likely to consider an alternative.
Why insight stays home
"The few examples that there are of outsourcing or insourcing customer insight indicate that there are a whole host of other challenges far higher up the agenda for those adopting such arrangements," noted Paul Walker, head of customer insight for Detica. According to Walker, these agenda-conquering issues include data quality, data protection compliance, resourcing, reporting, and measuring campaign performance.
"Where respondents have actually relinquished control and ownership of their customer insight capability to a third party, there is conclusive evidence to show that the future trend will be to move the capability back in house, with the empowerment of their own resources," explained Walker. "These findings ratify the widely held belief that an organisation's most valuable business asset is its customer data."
Co-sourcing, which is where a third party appoints a systems integrator to build a customer insight capability, jointly operated and managed with the client (who takes full control after a period of knowledge transfer) appears to be gaining momentum in the market place.
Co-sourcing allows companies to stay in control of their customer data while bringing in the necessary skills and technology to extract value from it. The MORI research found that 90% of those currently using third party expertise cited the availability of key skills as being an important consideration when using an external organisation.
"Some aspects of customer insight are difficult, and this is reflected by low levels of satisfaction within organisations about their own ability to create the single customer view, or perform really effective predictive modelling, customer segmentation or profiling," explained Walker. "Companies have seen the dangers of wholesale outsourcing but, at the same time, are utilising specialist knowledge from external partners to augment their in-house teams."