What is the correct response to having a quarter of your budget given to someone else on the executive board? Resignation? Retirement? Submission?
That is the prospect currently facing CIOs, at least according to Gartner. The analyst company predicts that by 2014, up to one quarter of all technology spending will be controlled by the marketing department.
Often, when line-of-business divisions take control of technology spending, it is a vote of no confidence in the IT department. “Chiefly that happens when managers do not trust IT to deliver,” says Gartner analyst David Aron. But what we are seeing today is different, he suggests.
The fact that marketing may control such a considerable slice of IT spending is a reflection of the importance that IT plays in the modern marketing organisation, says Aron. It does not necessarily reflect disillusionment with IT and there may indeed be opportunities for IT to influence that spending.
Over the past decade and a half, technology in general, and the Internet in particular, have become integral to marketing. It began with bulk email, promotional websites and lead capture pages, and evolved to encompass social networks, mobile apps and online customer communities – technologies that are often described under the banner of ‘digital engagement’.
And while quintessentially information driven, for most organisations these technologies fall outside the purview of the IT department.
Such is the marketing department’s reliance on information technology, says Dachis Group analyst Dion Hinchcliffe, that some organisations have appointed a “CIO of marketing”.
“I think that the CIO of marketing is really just the proverbial canary in a coal mine,” he recently wrote. “The urgency and tech-centricity of digital engagement is creating an irresistible need for strong technical and implementation leadership not just within marketing, but other key business functions as well.”
In Hinchcliffe’s view, this trend heralds the fragmentation of the IT department. Business units are crying out for social, mobile, cloud-based and customer-focused IT and they cannot wait until the IT department gets round to providing it.
“They have come to realise the only way to get it is to have a mature management capability of their own that understands long term technology portfolios,” he argues.
Research by the MIT Sloan School of Management suggests that this is not the only approach organisations are taking, however. It found that around 60% of top- performing organisations place all the so-called digital assets under a single executive – perhaps not the CIO, but someone the CIO may be able to do business with.
Other firms Sloan analysed either used a co-ordinating executive to manage all separate areas of digital capability – which does look more like a traditional CIO approach – or had separate digital innovators within parts of the organisation. That split may be best understood by how each individual organisation sees the IT function, says Gartner’s Aron.
For some firms, the IT function remains purely about automating systems, delivering back office applications such as enterprise resource planning, that help organisation function smoothly but having next to no input in strategic decisions. “Here, especially if IT hasn’t gained a credible reputation for delivery, its easy to see that firms may look to someone outside of IT to span marketing and technology,” he says.
But where IT has been involved in digital business strategy, helping businesses to understand the power of information, assisting them in identifying new business opportunities or in organisations where IT is engaged in front office systems, and delivering customer service through electronic channels, there is a far stronger likelihood that IT can actively engage with the chief marketing officer (CMO) and the enterprise as a whole, he says.
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Chris Perry is co-chief executive at marketing technology supplier Fabric Worldwide. As such, he spends a lot of his time spanning the divide between the CIO and CMO.
In many cases, the two fail to find common ground, he says, because of culture clashes or an absence of shared vision. “But increasingly, especially in consumer-driven organisations, company leaders are seeing the potential of building strong bonds.”
For some, that may mean creating a role along the lines of head of marketing technology; for others it is simply a matter of ensuring the senior executives have strong working relationships, says Perry. Either way, what firms are looking at is a way to blend marketing’s understanding of how to reach out to customers with IT’s understanding of how to manage vast quantities of customer data.
For IT, the end goal should be to help the business innovate while convincing it of the need for less glamorous but essential functions, such as data governance.
But while regulation is an important factor, as customers are increasingly sensitive about how large firms treat the data they collect about them, CIOs that use it as their opening gambit with marketing tend to get off on the wrong foot, Perry says. “Marketing wants to hear about the power of big data initiatives.”
It is often said IT lacks the ability to market itself. According to Mitch Denny, chief technology officer at Australian IT services firm Readify, building a good relationship with marketing may help to remedy this.
Denny has a rare perspective on the relationship between IT and marketing; despite IT being his primary focus, marketing also falls under his remit. “In my role, I provide the input around strategy for the marketing team, and then leave them to execute,” he says. “About five minutes later they talk to me about the systems required to support them.
“I suspect I work fairly well with them because I’ve taken the time to get a better understanding about the marketing process – I’m no expert but I try,” he says. Denny advises that the IT department though it were an third party supplier, identifying its business needs and pitching the systems to support them. “IT needs to look at the systems needs of marketing and set about delivering them,” he says. “Basically, IT is just a vendor.”
That mindset, where IT is attuned to providing customer service, can provide the foundation to building two-way communication with all parts of the enterprise, says Gartner’s Aron.
The role a CIO plays within an organisation is not set in stone, says Aron, and there is a current of change sweeping the profession, meaning it is no longer clear whether a CIO should be trying to control every aspect of IT within the organisation.
“We’re see many changes to the role of CIO,” says Aron. “For some that has meant a shift towards specialising in mergers and acquisitions or change management; for others it’s about helping the business innovate.” Some of these changes will fundamentally change the relationship between IT and the rest of the business, whether it is marketing or finance or HR. But ultimately the way the IT function will thrive is through finding ways to deliver value to the business, he adds.