Tag Archives: CIO

Why CMOs Will NOT Spend More than CIOs on IT?

Ever since Gartner made that dramatic announcement in 2012 that by 2017, a CMO would spend more on IT than a CIO in a typical enterprise, there have been many media stories, analyses, and animated discussions in both CMO and CIO forum about whether, why and how it will happen.

But mostly, I have read the analyses in US business/tech media or some specialized publications in India on marketing or IT. I decided to write this when I read a front page story, CMOs may soon outpace CIOs in technology spending, in one of the best among Indian business media, when it comes to catching a serious trend, Mint. For last two years, it is the world of marketing that I have been operating. Before that, as the editor of Dataquest, CIOs and IT departments consisted of my world. So, nothing excites me more than an issue concerning both.

Though the headline seems like a complete rejection of the idea, I must clarify, however, that I am not at all dismissive of the trend—that marketing departments are increasingly putting a lot of thrust on technology. With online and social media becoming important channels of marketing, and technologies controlling those media changing every single day, there is not really any other option for smart marketers. With the IT departments of today not geared up to respond at the speed at which they expect them to do, they resort to DIY approach. That explains hiring of own “marketing technologists”, as the article points out, and an increase in IT spend.

The trend, in a broader sense, is not new. Ever since the on-demand model has come into play, any business manager can, without answering too much questions from the corporate finance department, try out any application. After all, she is only using her budgeted opex and using no IT capex that should involve the IT department. And when I say any business manager, I mean any business manager, not just those in marketing departments. In fact, in early days of Software as a Service (SaaaS), it is these functional managers, frustrated with what they described as extremely slow pace of the IT departments, started implementing many of the point solutions, using this new-found freedom (SaaS). In a story on SaaS that I did for Global Services magazine (which was being published from the US) in 2006, I focused completely on this aspect and got a fair bit of appreciation and criticism from bloggers, mostly from the US. Unfortunately, that article is not available online now. One popular blogger who wrote on procurement even labelled the article a last-ditch effort to save the soon-to-be-extinct species called corporate IT departments.

After eight years, the endangered species not just survives but thrives. And not because of my article!

Many of those SaaS applications that the functional managers had invested on are either extinct or are part of a bigger suite and are handled by the corporate IT department under CIO.

Why? Partly because, these functional departments were not silos and could not operate as independent units; they had to interact with the other functions and the enterprise systems for smooth information flow, at some point of time. That raised a lot of technical issues which the functional managers were not capable of handling. But more importantly, many of the smarter managers never really wanted to handle. They realized that it was not worth their time and energy to devote so much attention to applications and technologies—which were anyway getting standardized—at the cost of new business challenges and opportunities that needed their attention.

There is no reason to believe that it will be any different in case of marketing technologies. True, the IT departments, compared to marketing departments, are slower. But that will always be the case. As guardians of governance and compliance in the enterprise, they will always remain a bit slower than customer facing marketing departments.

But the problem is not exactly unreal. Marketing departments which have to execute really fast many a times, have to have some solution to their problem.

The organizations must tackle the issue head on. And that issue is not CIO vs CMO, as media loves it to portray. In fact, there are two issues.

1. Getting the right balance
2. Find out a model of co-ownership that works

The first is not really a CIO’s or a CMO’s responsibility. It is actually, the CEO’s or in some enterprises the COO’s, with a little help from the CFOs. The key question is: what speed is good enough? The CMO could want supersonic speed. But is the organization ready for that? Does it even need that? Is her demand fair? Is it even necessary to prepare IT department to match that speed? The CMO may be wedded to an idea or may want peer appreciation. But then, everything has a cost. And the cost is not just what she would pay to the vendor for an app or the cost of hiring a marketing technologist. The long term cost has to be calculated taking into account the cost of integration with the enterprise.  From the organization point of view, is it worth that cost, at that point of time? So, it has to find out where lies the balance.

The second follows  from the first. There is no one best model for all. Depending on business, size, geography and genesis, an organization has to decide what is good for it.

An organization may decide that compliance and governance are of utmost importance, at the cost of everything else. In that case, it makes sense to route everything through IT department, even though it takes a little longer. In that case, the challenge is to make the IT department as efficient and faster as possible.

Another organization may decide that speed is extremely important. In that case, it may find its own solution. The marketers may need to invest directly on technology and technology manpower, with or without the IT department acting as a consultant, or for creating a specific set of rules of procurement and implementation.

An organization may even decide that the marketing may be given complete freedom to invest on their own technology vetted by IT department and may had over the system to the latter once it stabilizes.

In short, the real solution is finding a model that takes into account why both these departments were created, what is the current situation, and what would be the best model to go forward, by making the CIO and CMO cooperate.

Most organizations are realizing that there is a need to have two sets of people in IT: the demand guys—who would sit with the business needs to decide what is possible using technology and what is needed—and the supply guys, who would ensure that IT services are delivered reliably and efficiently. In many traditional organizations, the IT department is optimized to perform the second role and the approach to first role is ad-hoc, often pulling someone from IT department who knows “that technology” along with an enthusiastic young chap in the functional department, who is seen as being “tech savvy”. It is in these organizations that are good breeding grounds for conflicts between business managers ad IT departments. Just that the horizontal marketing community is a little bigger and a lot more vocal than other business managers.

Going back to the much less important but far more hyped debate of who would spend more—CIO or CMO—you do not need too get into so much of analysis to get an answer. As much as 70% IT cost in an enterprise is on maintenance and upgradation. A lot of that is on IT infrastructure such as hardware and systems software. So, factually, even if one assumes that a lot of new investment decisions will be taken by someone else, that will still not affect the overall balance so much. In other words, CIO will still account for a large chunk of IT spending, even if the organization follows a model where functional units are given charge of their own technology establishment.

 

Leave a comment

Filed under Content Marketing, Data Driven Marketing, Digital Business, Enterprise Technology, Marketing, Thought Leadership Marketing

Mr CIO: Can You Give Up the Control of Nuts & Bolts to Move to A Business Role?

Yet another report tries to demystify the new CIO. An Ernst & Young report, The DNA of the CIO: Opening the door to the C-Suite (You can download the full report here), claims it provides fresh insight into what is to be a CIO today. The report, the result of a survey among 300-odd CIOs and some 40 other CXOs to provide,  “a perspective on how the CIO is perceived by the rest of the executive management team.”

The report builds a profile of the typical CIO (He is 43 years, male typically), gets into how his role is changing, what comes in the way of his effectiveness, and even provides a toolkit for the aspiring CIO. It even has an interesting video

Getting into the C-suite has been a consistent dream for the CIOs in recent times. A select few have managed to achieve it. Most others are in the aspirational mode. In my five years as the editor of Dataquest, I have been part of many formal (panel discussions, Q&As) and informal discussions with CIOs on various topics: technology, products, hiring, managing, their role, their interests. But invariably I have found the discussion steering towards the role and responsibilities of the CIO, never mind if the topic was BI or cloud or BYOD, not to talk of management issues. The exact nature of discussion would vary depending on whom you are talking. For a very small number, the aspiration is the CEO/COO position. For the rest, it is still, being regarded as part of the top management. The E&Y survey finds that only 17% the CIOs that it spoke to are part of the executive management team. That percentage would be far lower in India.

But that is not surprising. Neither is it a reflection of the CIO’s capability, considering that IT is fairly new to the enterprises as a separate function.

But there is something I find dichotomous. Almost very CIO believes that he is performing a business role and should be part of the top management/board. But when I’ve asked if he (the gender non-neutrality is because I have not asked the question to a single woman CIO yet, my apologies) would be willing to give up the control of IT infrastructure, which he anyway admits is non-strategic, I have rarely (once, to be precise) heard Yes for an answer. I must have asked this question to some 60 odd CIOs.

But will not giving up the nuts-and-bolts which eats up lots of his time, free him to focus more on working with business to assess the need of solutions that the latter needs and formulate a better IT strategy? In other words, while the demand side of IT is managed by the C-suite CIO, the pretty standard supply side is managed by someone else?

Why is the reluctance then? And if the other C-suiters believe that he is helpful only in fixing their laptops (see the E&Y video, linked above), how can they be blamed?

“Unless you can have the end-to-end control,” a few would argue, “you cannot really achieve what you want to.” The looks in their eyes give clear indication that they know I am not convinced. The truth is, most of them are themselves not convinced about this.

If they want to hold on to the servers and networking and laptops, because they think that is where they derive their power from. It gives them the control of a critical infrastructure and hence the organization is highly dependent on them.  But alas, this dependence is the reason why the CEO does not want him in strategy meetings. He should better be in the server room doing the firefighting!

Also, another thing that goes unsaid, is that the control over hardware and networking also gives them control over that budget. That is a huge part of IT spending. That makes them important in the eyes of the vendors. They get chased; get invited to parties and great locations; get featured in the media. Their classmate who joined Infosys after  college may be getting a fatter salary and a few overseas assignments; but he never gets that kind of importance that the vendors give him.

The proposition is simple. If more CIOs want to be considered moving up the value chain, they have to do that by vacating the lowest value tasks that they do. Many of them agree that IT infrastructure fire-fighting is one of the lowest value jobs that they do. So, doesn’t it make sense to just say good bye to that?

Leave a comment

Filed under Enterprise Technology