Strategy clinic: staying ahead in the new media sector

Question

My brief is to set technology strategy to develop and support new business at a new media company. I have read statements to the effect that...

Question

My brief is to set technology strategy to develop and support new business at a new media company. I have read statements to the effect that technology alone is rarely the key to unlocking commercial value, and that companies will leverage information itself in new ways in the years to come, whether by using information to make smarter calls, or to create new models. How can I get a good handle on the state of the art in this area?

Answers

Elaine Harris, media and entertainment global client partner at Ernst & Young

Companies are recognising that consumers are gaining the balance of power because of digital media and the internet. Finding and keeping those revenue-generating customers has never been harder. One way to get a handle on the "state of the art" is to stay updated in the technology, entertainment and communications industries, along with other industries that are utilising digital technology.

Your technology strategy for a new media company will need to have speed, storage and security. If any are missing, it will likely be impossible to acquire and maintain customers. Using technology, your challenge will be to create revenue for new business models and help maintain profitability as traditional revenues come under pressure from new competitors and the erosion of advertising income, while also tracking the actual costs of digital delivery.

Most new media companies rely on some type of advertising as their key or sole revenue generator. For example, 2007 will be remembered in the sector as the year when Google, a company founded just 10 years ago, first overtook ITV1, Britain's 50-year-old top commercial TV channel, in UK advertising revenue. The models are becoming more targeted and data centric. But, only 10% of global ad revenue is via the internet, so we are still at the infancy of this channel.

Let's look at the two competing "forces of change": technology forces (bandwidth, storage, access and connectivity) and consumer forces (control, adaptability, choice and speed). The core components under your influence can include content creation, distribution and delivery, consumer aggregation and reporting, measurement and analysis.

Based on demographic and customer segmentation, your strategy could include the blurring of original and advertising content, better targeting and segmentation, on-demand programming, user control and storage, social networking and online asset pricing and optimisation, demographic and customer segmentation, behavioural and predictive targeting, and offer management. Considering multiple platforms, devices and formats is a must in these very exciting times.

Chris Potts, corporate IT strategist at Dominic Barrow

The state-of-the-art strategy in new media achieves two parallel but often competing objectives. It harnesses the value of everyone's personal strategies for exploiting information and technology while holding the total bottom-line costs of IT within pre-planned constraints.

These strategies are the third generation of corporate strategies for IT. They bear little resemblance to the original IT strategies on which many of us were brought up, and are a paradigm shift from the more recent second-generation strategies.

First-generation strategies were focused on technology roadmaps and the people who delivered them. The IT department's role was initially to be the creators, and then integrators, of IT systems. Post Y2K and dot-com, second-generation strategies then treated IT as a collection of services that must perform satisfactorily and become progressively more efficient. In "IT strategy 2.0" the IT department became a supplier of IT services to internal customers.

As everyone has become more confident at using IT to create value, and executives have kept the lid on IT costs, another major shift has occurred in strategies for IT and the IT department's role. Third-generation strategies for IT are now primarily focused on the people who invest in and exploit IT, and on company-wide IT costs. The IT department's primary role is corporate leadership in the creation of value from business investments involving IT.

So you have a choice of three generations of IT strategy. Each means a very different role for you and your department. As the company's chief strategist for IT, your first decision is which of them will be the most appropriate. Then propose a one-page statement of that strategy to your executive colleagues, to secure their backing and involvement.

Sharm Manwani, Henley Management College

You have certainly taken on an interesting challenge and identified that the first step is understanding how to generate commercial value from the new media business development. This approach would apply in most private sector organisations, but is perhaps even more important in an industry with a heavy reliance on technology.

Given your focus on new business, you should be looking for innovation either in the business model or in the technology. Depending on the potential value and the combined risks, you may even be willing to pursue an opportunity that requires innovation in both areas.

However, prior to this drive for innovation, you need to make sure that you are comfortable with the business language and terms in your new industry and organisation. People often mean different things when they refer to business models, but broadly it is about how organisations make money by satisfying the needs of their customers. You should first obtain a general perspective on the components of a business model. Reading around the subject and making use of resources on the internet is a good way to start. This will support your wide discussions with a variety of internal and external stakeholders to apply this to your own organisation.

As you rightly point out, information is critical in developing the required new media business model. There are different ways of generating commercial value through information including identifying, targeting and acquiring new customers or selling content or attracting advertisers to your site. You may apply a combination of these approaches.

Given that your brief is to set the technology strategy, you may also need to broaden your personal skills in this area. You have not defined your background in your question, but I assume you are broadly familiar with the main front-end technologies. The challenge is to be able to offer agile systems without jeopardising the reliability of the front-end systems.

Ben Booth, vice-chair BCS Elite, global chief technology officer at Ipsos

The great thing about applying IT in a sector such as the media is that as well as supporting the business, technology is also one of the primary means of delivering information to your customers, and is therefore is of central importance to future success. The skills that can be successfully applied in such a situation are those of technology and also information management.

I would start by carrying out an audit of existing information resources. What information have we got about our customers that will help us sell more to them, and what content do we have which can be re-packaged in a number of different ways? I would also look at what different types of delivery your customers may want - e-mail, e-mailed links to a website, SMS and so on. I would also look at what competitors are doing, in terms of products and technological innovation, and I would also look at emerging technologies to see what is of relevance. Overall there will be many exciting opportunities.




This was last published in June 2008

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