We are witnessing an interesting shift of power and prominence within corporations. Marketing is the new heavyweight in the room because its role in revenue growth is today more important than at any time in the past. For example, digital marketing drives the lion’s share of growth across many industries. In recognition of that contribution, companies are formally and tightly binding the marketing function to core enterprise goals. This new alignment requires more than attractive PowerPoint decks and positive words about abstract concepts during quarterly reviews. Outcomes are measured, and CMOs are held to account.
This power shift ties directly to marketing’s dependence on information technology. In fact, Gartner predicts that by 2017 the average IT budget of a CMO will be larger than a CIO’s budget. At first glance, this seems a bit strange and almost counterintuitive. What’s going on?
A profound but quiet evolution has been underway since the turn of the century, but not everyone noticed the clues or used them to assemble the big picture. These are the most important transformations:
- Marketing’s reliance on technology has increased steadily over the years. Today marketers are utterly dependent, and cannot operate without these platforms and tools.
- The breadth and diversity of enabling technologies and delivery platforms became far greater for marketing than for any other business function.
- The Internet has changed the rules about how companies connect with customers as evidenced by the growth of inbound marketing at the expense of outbound. Consumers are empowered like never before; and companies need to engage them through an unprecedented variety of channels. The platforms where those channels live change constantly, especially in the mobile space. Keeping up is a huge challenge.
- Metrics rule the roost. Subjective assessments haven’t gone away, but they are now the black sheep in the family of marketing skills. Marketers need a lot of computerized tools to measure things, store results and generate actionable conclusions. Compare any CMO’s current accountabilities to those of his/her counterpart from 15 years ago. You’ll be amazed.
- More automation solutions and tools are delivered as services over the Internet. Not everyone wants to buy or lease software and run it on their own hardware. In most cases you don’t need as much help (if any) from IT to implement these services. The absence of CAPEX and the opportunity to “pay as you go” via monthly subscription fees makes them compelling choices.
As a result, marketing organizations have been exercising more control over technology decisions and the expenditures they generate. In large enterprises a constant tug-of-war between corporate IT and business functions/business units has been ongoing for decades; but in recent years the pendulum has swung away from corporate headquarters and towards the functions. After many years of centralized cost-cutting, the current trend reflects a need to make rapid decisions and execute plans promptly – even if they’re not optimal for the entire company. Traditional 18-month budgeting cycles and endless justifications for IT investments don’t accommodate needs that are driven by lightning-fast changes in the economy, marketplaces and consumer tastes.
On the other side of that coin are new types of accountabilities for CMOs. They need to be savvy about technology and provide compelling evidence (metrics) that demonstrate positive outcomes from corresponding investments. And that’s in addition to their more traditional marketing responsibilities where the bar has already been raised to unprecedented heights.
We’re not entirely sure how larger companies will organize themselves in Gartner’s 2017 world. We disagree with those who assert that IT organizations will be marginalized and have limited scope. However, we do agree that functions and business units are developing their own IT expertise and controlling more technology investments. As such, the nature of the relationship between marketing and IT is changing and the ownership portfolio in both organizations will be adjusted.
At the end of the day the organization chart matters less than a deeper shared commitment to enterprise goals. We have spoken frequently about the lack of alignment between marketing and sales and how it can sabotage revenue generation in a company. The relationship between marketing and IT has many similarities, but one major advantage is readily apparent: the lack of a hard dividing line between the organizations. In contrast, the schism between marketing and sales has been present for decades and can, in extreme circumstances, be characterized as a cultural trait.
The lack of enmity bodes well for a new form of integration and alignment between the two organizations. Your new CIO may turn out to be your CMO, but only if he/she is a masochist. We think there’s plenty of work to go around and the advantages of a single cross-functional organization are dubious. Plus, we don’t think marketing folks want to manage network security experts or Sarbanes-Oxley auditors who service the entire enterprise. Dotted line accountabilities between individuals and organizations can work very well.
We love to say, like impassioned street revolutionaries, “More power to the CMO!” Just don’t go overboard …
. . . and the CIO, more strategic. Yet, in the 2012 InformationWeek Global CIO survey, 38% of IT leaders cited cutting costs, and 37% cited making business processes more efficient for their top priority.
While these initiatives are important, it’s interesting to note that 32% cited “introducing an IT-led product or service,” and only 30% for “creating a new revenue stream or business model.” Clearly, for all the talk of IT as a strategic asset to companies, CIO’s retain their focus on cost reduction and productivity improvements.
While these results are concerning for business innovation, they’re not surprising against the backdrop of IT executives who describe their relationships with certain departments as ‘poor’ or ‘neutral.’ In the same survey, Marketing was the top department in that category, at 27%, followed by Supply Chain (24%), Finance (22%), R&D (21%), Customer Service (20%), and Operations or Manufacturing (15%). Clearly, there’s plenty of opportunity for IT to support marketing. Oddly, the alleged Sales – Marketing schism gets most of the mindshare in the blogosphere.
While I agree with most of your ideas, you mentioned “Consumers are empowered like never before; and companies need to engage them through an unprecedented variety of channels.” The second part of that statement is mostly true. But I’ve been reading the part about consumer empowerment for a long while, and I don’t buy it–mainly because people confuse access to information with empowerment. But information access doesn’t mean a consumer will come away with greater understanding, insight, or even the ability to make better decisions. In that way, I think “consumer empowerment” is greatly overblown.
And what’s also overlooked is that while consumers have unprecedented access to information, so do companies . . . and yes, they know how to use it.