News

Front Lines is a guest viewpoint section offering perspectives on current issues and events from people working on the front lines of Canada's technology industry. Anthony Boright is President of VAULT Solutions Inc., a Toronto firm that provides Web-based communications consulting for the financial-services sector (aboright@vaultsolutions.com).

Canadians use the Web as much as any people in the world. Our rates of Web usage, penetration of broadband Internet connectivity, and on-line banking are very high. But is this why Canadian companies are moving their communications on-line?

Partly. But the main reason they do it is cost.

In any organization, the impact of the Web is lauded by the Finance Department from a profit-and-loss standpoint but condemned by HR from the lost-jobs perspective. The fact is the Internet has spawned billion-dollar organizations and foreclosed on million-dollar homes. It has also:

• Changed work habits and the overall 'life balance'
• Forced organizational restructuring within firms
• Created shifts in marketing strategy
• Prompted budget debates as marketers evaluate the relative benefit of investment in one medium over another.

A few years ago 'Integrated Marketing' was big, as marketing channels (print, TV, radio, kiosks, in-store/branch) were evaluated and the Web was positioned accordingly. The Web was initially an afterthought, but gained in acceptance as organizations grew more comfortable with the technology. But today the communication emphasis is for the 'On-line' channel, with all other channels falling into the 'Non-line'.

More relevant communications

The most commonly cited benefits for the Web over other channels is the immediacy of the channel, the relevancy of the message, and the personalized experience for the user. Twenty years ago when I was a Consumer Packaged Goods marketer, I used a database marketing company to help us identify high-volume/frequency customers, lapsed users and competitive users. I developed incentives for all these users with coupons. We mailed everyone a survey and the survey data was sold to other sponsoring firms. Then we did a follow-up mailing and offered a 50-cent coupon to those who bought our product and a $2 coupon to those who needed a push to buy. But the process took months, was labour-intensive for consumers, vendors and clients, and it was very expensive.

Recently I received a personalized, direct-mail letter inviting me to visit a website where I found a highly relevant, on-line communication. No doubt, I will get a follow-up call and the person will know when I visited the website, what products and services I clicked on, and how long I lingered in each area.

Nowadays many organizations know where you work, where you live, where you shop, what you read and what you watch on TV. Indeed, data is the life-blood of any marketer and it flows freely through the Internet. In fact, just about every marketing communication now includes a URL reference.

Cost savings

Of course, firms do not promote the cost savings associated with on-line communications, but make no mistake, those savings are substantial. While banking customers are sometimes pushed to the Web under the guise of "Improved, 24/7 self-help customer service", this Internet focus is looking at the bottom line. Banks channel transactions to the Web because the average cost per transaction is less than one cent, compared to $1 for a phone call and even higher transaction costs when dealing with a bank teller in the branches.

It's the same thing with annual reports. Few public companies have abandoned the print version, but now many of them create interactive, on-line annual reports that can be more engaging, relevant and personalized than print. While analysts may digest the pages of consolidated financial statements, not all investors want to so why mail everyone the whole document? And let's not forget that on-line annual reports involve less production time and great savings in print and distribution costs.

Is it any surprise that a pharmaceutical manufacturer just announced it would not produce a 2005 annual report but would limit its annual reporting to a 10-K filing with securities regulators? Why not? The cost of design, print and mail for the annual report was about $250,000.

By the same token, a leading mutual fund company discovered that the PDF version of its annual report was downloaded from the corporate website last year some 250,000 times; it was likely downloaded by investors and analysts with a genuine interest in reading the 56-page report. But not every shareholder wanted to read it.

Organizational facelift

When large organizations restructure, the Web offers a relatively quick way of transforming the corporate public persona. It can also be used as an interim step in the re-organization or re-positioning of a big company.

For example, the wholesale business of a leading Canadian bank operated efficiently for years within its individual lines of business, but had problems aligning its efforts and creating a value proposition that appealed to its customer base. And so the process stalled. Discussion soon turned to a shift from 'product-centric' to 'customer-centric' operations which further complicated matters, since the individual lines of business could not reach any consensus. But now a website re-design initiative is forcing the bank's internal businesses to make compromises and put the best consumer face forward. A website re-design can be used as a catalyst to re-organize a corporate structure and get buy-in from the lines of business who must agree with how they want to present themselves externally.

Similarly, a large Canadian pension fund sought to move its communications strategy from a product-and-service 'silo' approach to a life-stage, event-triggered communication. Rather than staff a call centre in order to field questions from anxious members and pensioners, the firm wanted to proactively identify events that might affect a pensioner's income (e.g. "If you take a leave of absence, you can continue to make contributions"). Infrastructure and cultural barriers made this a difficult transformation, but a website re-design allowed the pension fund to redefine some of the internal processes necessary for moving towards this life stage model. The pension fund was gradually able to restructure by updating sections of the website only as the organization was poised to deliver on each new process.

The human cost

As far as cost savings are concerned, many organizations can automate some manual, administrative functions on-line, but they will cut jobs in the process. While no one wants to discuss the cost of jobs when it comes to the on-line impact on organizations, we should all realize that the Web is definitely streamlining operations.

Protectionists who sound the alarm over outsourcing jobs to the Far East or who lobby for government subsidies for faltering industries are ignoring the impact of the Web. On-line communications affect almost every facet of business, and while its impact on the 'Non-line' can be threatening, we should accept this as an opportunity that is ripe for exploitation.