Tag Archives: CMO

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.

 

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